DATAWATCH - Hong Kong inflation in 2007 seen mild - BoA |
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Thu, 22 Mar 2007 11:24
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HONG KONG (XFN-ASIA) - Inflation this year will see only mild growth in the absence of major pressures from segments of the economy, a senior economist at Bank of America (Hong Kong) said, after the government released data for February showing a slight 0.8 pct increase in consumer price index year-on-year.'I don't see any strong inflationary pressure in Hong Kong in the coming months and inflation will likely move up very modestly, and average throughout this year at between 2.0 and 2.5 pct,' Qing Wang, Bank of America (Hong Kong)'s head of economics and strategy for greater China, said.'Even if domestic consumption is strong, I don't see it pushing up inflation significantly because prices of imported goods that are consumed here are determined by factors in the international market, not by any upsurge in local consumption,' he said.He noted that inflation in February was below the forecasts made by BoA and other houses.The government just reported that composite consumer price index in February was up 0.8 pct from a year earlier, compared with a 2.0 pct year-on-year increase in January.A government spokesman said in a statement that the smaller year-on-year increase in the composite CPI in February was mainly attributable to the waiver of public housing rentals by the Housing Authority and Housing Society for the month.He said the waiving of public housing rentals, 'pushed down the index by around 2.3 percentage points in that month, far outweighing the lifting effect stemming from the difference in timing of the Lunar New Year in 2006 and 2007.'The Lunar New Year holidays this year fell in February unlike last year when those holidays were celebrated in January.The spokesman said If the two factors were to be discounted, composite CPI would have risen by about 2.5 pct year-on-year during the first two months of this year, up modesly from 2.3 pct in December last year.BoA's Qing said that had it not been for the one-time government tax relief, inflation would have risen modestly in February from the previous month's level.'Housing and rentals, which account for a significant portion of the CPI basket, have been rising modestly and I don't foresee any significant change in this trend,' he said.'Even if Hong Kong imports most of its foodstuff requirements from China, I don't expect this China factor to change the inflation outlook for Hong Kong anytime soon,' he said.'And even if China's yuan has been appreciating against the Hong Kong dollar, the rate of appreciation remains modest and minimal, and I therefore don't see this causing any potential spiral in Hong Kong's inflation rate,' he added.jun.concepcion@xfn.comjc/net
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