Updated at 6.55pm: Hong Kong's inflation rate rose to 1.2 per cent in June over a year earlier, following a 0.8 per cent year-on-year increase in May, government figures released on Friday showed. The Census and Statistics Department revealed in a statement that increases in consumer prices became larger in June because declines in private housing rents and charges of telephone and communications services had been reduced. It said increases in vegetable prices also contributed to the rise in consumer prices. Between April and June, consumer prices rose by 0.8 per cent compared with the same period in 2004. For the first half of 2005, the index rose by 0.6 per cent from a year earlier, the statement said. A government spokesman said inflation edged up during the first half of 2005 as the territory's economy was improving. But he said inflationary pressure remained moderate. 'Looking ahead, consumer prices are expected to firm up further in the coming months due to the strengthening consumer demand and the rising labour cost and rental cost,' he explained.