- Inflation rate increases to 3.3 per cent in June, the highest since August 2016
- Economist brushes off fears, saying ‘It’s just that we’re used to a low inflation rate’
Hong Kong's inflation increased in June at the fastest monthly rate in almost three years, driven mainly by the surge in pork prices caused by the African swine fever outbreak in China.
Government date released on Monday showed inflation growing at a rate of 3.3 per cent last month compared to 2018. After netting out the effects of one-off relief measures, the inflation growth stood at 3.2 per cent, faster than the 2.8 per cent year-on-year pace recorded in May.
The local government said skyrocketing pork prices and an uptick in charges for package tours were factors in the inflation growth.
A government spokesman said he expected overall price pressure to remain largely contained, citing an easing in home rentals and modest global inflation.
The inflation rate in the near term may hinge on the supply situation and thus prices of fresh porkGovernment spokesman
"The inflation rate in the near term may hinge on the supply situation and thus prices of fresh pork," he said.
Two weeks ago, pork trade representatives said pig auction prices were at record-high levels, reaching over HK$4,000 (US$511) per picul " more than double the roughly HK$1,600 per picul in May. A picul is an Asian unit of weight equal to 60kg or 133 pounds.
Professor Sophia Chan Siu-chee, the city's food and health secretary, noted at that time that the African swine fever epidemic on the mainland had greatly affected the supply in Hong Kong, which relies heavily on live hogs from across the border.
More than a million pigs had either died from the disease or being culled since last August, according to news reports.
Two local cases of African swine fever were detected in May, pushing the price up as the city's abattoirs were temporarily closed and nearly 11,000 pigs culled. The virus is deadly to swine but harmless to humans.
The 3.3 per cent inflation growth reported in June was the highest rate since August 2016, when it reached 4.3 per cent.
Economist Andy Kwan Cheuk-chiu, director of the ACE Centre for Business and Economic Research, agreed that the surge in pork prices was the main driver of the inflation rate. He pointed out that food prices usually accounted for about 30 per cent of the inflation rate.
But Kwan brushed off fears of an inflation crisis, saying that 3.2 per cent growth was common in a normal economy.
"It's just that we're used to a low inflation rate," he said.
Kwan predicted the inflation rate would stand at 3.2 to 3.5 per cent in the second half of this year, while the annual figure would be around 3.1 to 3.2 per cent.
In February, the government forecast the city's inflation rate to be 2.5 per cent this year.
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