Hong Kong's inflation was 3.4 per cent last month - the highest in more than nine years - after rising to 3.2 per cent in October, as imported food, fuel and housing rental costs continued to rise. It was the highest composite consumer price index since June 1998, when inflation was 4 per cent. Hong Kong then fell into a period of deflation because of the Asian financial crisis. The CPI was minus 6.1 per cent in August 1999 and a positive figure was not recorded until July 2004. Official figures released yesterday showed food prices, excluding meals bought away from home, rose 11.4 per cent, led by beef (up 35.2 per cent), canned meat (31.1 per cent), eggs (30.7 per cent) and pork (27.8 per cent). Housing costs went up 4.2 per cent year on year. Electricity, gas and water costs rose 3.4 per cent, while transport costs increased 1 per cent. General Chamber of Commerce chief economist David O'Rear said the inflation figures were a concern and estimated the CPI would continue to rise, to at least 3.5 per cent for next year. He said that with the appreciation of yuan, the price of imported food would likely go up. 'The yuan will likely continue rising and it will push up costs,' Mr O'Rear said. The city imports most of its food from China, where food prices jumped 18.2 per cent last month. China raised interest rates again yesterday to cool inflation. Hong Kong last month raised its inflation forecast for the year to 2 per cent from 1.5 per cent, citing stronger domestic consumption, the appreciating yuan and higher food and oil prices. Senior officials have privately said inflation of 3 per cent was 'trivial', and anything between 3 per cent and 5 per cent was normal. A government spokesman said that November's slight inflation rise had been factored into the 2 per cent inflation forecast for the year. He said that sustained economic expansion, high food and oil prices, the weakening US dollar and appreciation of the yuan would continue to push up prices. 'Lately, the pickup in private housing rentals also deserves attention,' the spokesman said. Mr O'Rear agreed with the government's inflation estimate for the year.
