THE reduction in the Government's forecast of inflation this year from 9.5 per cent to nine per cent will trigger mixed reactions. The pessimists who believe the underlying rate is actually far higher will dismiss it as juggling figures. The optimists who forecast sub-eight per cent inflation in 1994 will be disappointed that the Government was not bolder in its reduction. Both responses will reinforce the suspicion that the true picture of inflation in Hong Kong remains hidden. Yesterday's figures on service-sector inflation showed that it continued to run at double figures, although it had declined slightly. With 73 per cent of the territory's GDP in some way coming from services, this remains too high. That the Government did not go the whole way and slice a full percentage point off its forecasts must indicate caution about future trends in prices. It may be true that the yuan depreciation has offset the rise in the price of goods from China, but the swap market rate has stabilised, and that advantage will work its way out of the calculations all too soon. The pressure on the cost of imports from Japan, too, must remain upward, despite the efforts by its manufacturers to contain their export prices, so the risk of outside influences adding to Hong Kong's already fertile home-grown inflation remains, although softening world commodity prices can provide some relief. Perhaps the significant figure in the inflation tables is the much wider measure - the GDP deflator, which measures a range of individual components of a country's output. This is particularly sensitive to import and export prices, and while it is down from 10.2 per cent in the last quarter of 1992 to 9.5 per cent in the first quarter of the current year, the Government is not prepared to bite the bullet on this figure, and is maintaining its forecast for the whole year at 9.5 per cent year-on-year increase. The only parties who will find this good news are other countries in the region which are still maintaining higher rates of GDP growth and lower rates of inflation.