Hong Kong

June 2008 | Ratings Update

Inflation continues to hover around decade highs in Hong Kong, as surging housing rents and food prices push consumer price growth ever higher. Headline CPI inflation accelerated to 5.7% y-o-y in May from 5.4% a month earlier, with housing costs increasing by 6.0% y-o-y - despite a government waiver on quarterly property rates - and food prices advancing by a massive 19.2%. However, with the HKD pegged to its US counterpart, the city state's monetary authorities have few tools at their disposal to control domestic inflation, and as such we continue to expect inflation to continue heading north over the coming months.

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