After five years and eight months, it is finally official: inflation is back. In the end, the much-anticipated moment was something of an anticlimax. But the importance of this economic landmark should not be overlooked. The slight rise in Hong Kong prices reflected by the composite consumer price index yesterday - 0.9 per cent to be exact - ends the longest continuous period of deflation experienced anywhere since the second world war. Over the past 68 months we have come to see deflation as an enemy, a symbol of our city's economic woes. The decline in prices was both a product of, and a contributor to, the downturn - and the pain that went with it. So the news that it has, at least temporarily, been vanquished is welcome. It is another visible sign of the economic recovery. The upward movement, however, comes as no surprise to Hong Kong's savvy shoppers. The reality is that prices have been rising for months, probably since last summer. It has just taken the CPI, which compares the figures for each month to that of a year ago, that long to catch up. As a result, the return of inflation has been widely predicted - hence, the sense of anticlimax. The CPI does not tell the whole story. It is calculated for a basket of commonly used goods and services, including private-sector rent. But for all its shortcomings, this is the headline figure. It is the official indicator of whether we have deflation or inflation. As a result, this is the one most likely to have a bearing on consumer confidence. It is ironic, however, that after so much agonising over the damage done by deflation, there are some who are already suggesting we should be wary of its departure. After all, inflation can be a risky business, as the mainland well knows, for it is battling to cool down overheating in many sectors. And do we really want to pay more for our goods? When our deflationary period began in November 1998 - after 23 years of inflation - many, including senior officials, welcomed it. Hong Kong was too expensive and needed to become more competitive. With our currency pegged to the US dollar, deflation was the mechanism by which economic adjustment could occur. But few envisaged it would be with us for almost the next six years. Certainly, there are some who have benefited. New flat buyers, for example, were able to cash in on reduced prices. And shoppers grew accustomed to sales, loyalty deals and special offers as retailers competed for business. But deflation also took its toll in terms of wage cuts, job losses and falling asset values. Householders saddled with negative equity suffered. We are just beginning to recover. So a return to rising prices should not trouble us too much, especially if wages quickly catch up and unemployment continues to fall. Indeed, the consensus among economists is that a level of inflation is to be welcomed - a by-product of increased economic activity and growth. A rise in the CPI has been the obvious omission from a flood of positive indicators over the past year. And already, Financial Secretary Henry Tang Ying-yen is hinting at an upwards revision of Hong Kong's growth forecast for the year. This may come as early as Friday, when second-quarter GDP figures are due. It is all the more important, now, that the government presses ahead with getting its financial house in order. In particular, that other economic statistic which became a symbol of the downturn - the budget deficit - must be dealt with, and the tax system overhauled. Just before the deflationary period began, Tung Chee-hwa expressed the opinion that the worst was over for Hong Kong's economy. Unfortunately, the worst was yet to come. This time, however, there is good reason to feel more optimistic, despite rising oil prices and concerns about austerity measures on the mainland. The return of a degree of inflation is a positive sign.