Hong Kong’s inflation accelerated last month as food prices climbed and the city’s currency fell against the yuan, pushing up import costs.
Consumer prices increased 5.7 percent from a year earlier, the government said yesterday on its Web site. That matched the median estimate of 14 economists surveyed by Bloomberg News. April’s gain was 5.4 percent.
Hong Kong gets most of its food from China, where prices climbed 19.9 percent last months, compared with a year earlier. Rising consumer demand and the weakness of the Hong Kong dollar, pegged to the US currency and down almost 6 percent versus the yuan this year, have boosted inflationary pressures.
“Hong Kong is importing inflation from China because of a rising yuan and more expensive food there,” said Joe Lo, senior economist at Citigroup Inc in Hong Kong.
While the currency peg leaves Hong Kong without an independent monetary policy to fight inflation, Financial Secretary John Tsang (曾俊華) has cut taxes and distributed subsidies to help people cope.
WAIVED RATES
The government has waived property rates for the second and third quarters last year, the whole of this year and the first quarter of next year.
“The inflation outlook is rather uncertain, because of volatile global food prices and the pick-up of domestically generated inflationary pressure,” the government said.
Igor’s Group, which operates 29 restaurants in the city including Wildfire, Stormie’s and Pickled Pelican, has raised prices this year.
“The bulk of the cost increases come from food, although rents, salaries and utility bills have also risen,” said Linda Kwan, marketing director at Igor’s in Hong Kong. “Some of these unfortunately got passed to our customers — there is no way we can absorb everything.”
Hong Kong’s economy expanded 7.1 percent in the first quarter from a year earlier, the fastest pace in two years, with household spending climbing 7.9 percent.
Food prices rose 11.2 percent last month from a year earlier, the government said. Rents increased 6 percent and utility costs climbed 6.9 percent.
Inflation will probably more than double this year from 2 percent last year, Lo estimated, topping the government forecast of 3.4 percent.
Producer prices jumped 5.8 percent in the first quarter from a year earlier, the biggest increase on record.
UNEMPLOYMENT
The jobless rate in the city of 7 million people was 3.3 percent for the three months ended May 31, matching a decade low and boosting incomes as businesses competed for workers.
Wages rose 2.7 percent in December, the most recent figure available.
For the first five months, consumer prices climbed 4.9 percent from a year earlier, the government said.
A 6.3 percent gain in February was the biggest in more than a decade.
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