China Knowledge quoted according to the latest report released by the Census and Statistics Department that Hong Kong underlying inflation rate which excluded the effects of the government one off relief measures rose 6.3%YoY in August this year larger than the 5.8% increase in July and reflecting the highest level in three years.

The department said that the higher underlying inflation was mainly due to the enlarged increases in private housing rentals as well as the charges for package tours and prices of fresh vegetables. Including the effects of the government one off relief measures, the city composite CPI rose 5.7%YoY last month after increasing 7.9% in July.

Prices of alcoholic drinks and tobacco jumped 20.3%YoY in August mainly due to the increase in tobacco duty by 41.5%. The prices of housing which have one-third weight in the total CPI rose 8.3%YoY.

Food prices in Hong Kong which took up one-third of the total CPI climbed 11.7% last month. Meanwhile, there were a YoY increase of 7.5% in the prices of clothing and footwear and a 16.2% decline in the prices of electricity gas and water largely as a result of the government's electricity charge subsidy.

The prices of durable goods fell 3.2% year on year in August. In the first eight months of this year, the composite CPI rose by 5.1%YoY.

A government spokesman said that inflation is likely to increase further in the coming months before peaking out as the lagged effects from earlier surges in international food prices and private residential rentals will continue.

(Sourced from China Knowledge)