MonitorBlame greed, not the yuan, for Hong Kong's food price rises
The strengthening of the mainland currency is more of an excuse than a real reason for shopkeepers to charge more for a bite to eat in the city
"Stronger yuan to bring Hong Kong higher food prices", warned a headline in last Saturday's South China Morning Post.
The article that followed quoted a clutch of importers and retailers, all saying much the same thing.
With the Chinese currency testing its strongest levels against the Hong Kong dollar since 1993, they all warned that the yuan's appreciation would drive up food price inflation here in Hong Kong.
It sounds like a reasonable argument. After all, the city imports much of its food from the mainland. And if the mainland currency rises against the Hong Kong dollar, then the cost of producing that food will climb in Hong Kong dollar terms.
What's more, a quick glance at recent history seems to support this view. In the first chart, the blue line shows the percentage change in value of the yuan against the Hong Kong dollar over the preceding 12 months, while the red line shows the rate of food price appreciation in Hong Kong.
As you can see, there's a pretty close match. Rapid yuan appreciation in both 2008 and last year clearly coincided with bouts of elevated food price inflation in Hong Kong.