Hong Kong entered its fifth year of deflation last month, with consumer prices falling 3.6 per cent compared with the same month last year as rents kept dropping and government rebates forced down utility charges. The SAR is suffering one of the longest deflationary periods in post-war history. Economists blame cheaper prices on the mainland and the currency peg to the US dollar. The composite consumer price index - which measures prices for a basket of goods and services - fell for the 49th consecutive month in November and equalled October's decline. From January to November, prices fell 3.2 per cent compared with last year. The government blamed the figures on 'a generally slack retail market and keen price competition among local retailers'. 'The further easing in property rentals and wages were also relevant,' it said. David O'Rear, chief economist at the Hong Kong General Chamber of Commerce, said deflation should bottom out in the next year or so. 'Within 12 months, we should be out of the woods. We're getting down to some prices that seem to reflect reality,' said Mr O'Rear. 'We're getting some growth in other markets that should increase demand for our services. We've seen fairly good GDP growth figures in the US - 4 per cent - fairly good trade figures out of China, even fairly good consumption figures out of Japan. These are critical figures for an international economy' such as Hong Kong's. Utility charges again led the decline, tumbling 7.2 per cent for the year because of government rebates announced earlier this year that drove down electricity, gas and water tariffs. Rents, which make up a third of the composite index, fell 7.1 per cent, while prices of durable goods such as appliances and furniture dropped 6 per cent.