Food supply from the mainland to Hong Kong is not affected by the Sichuan earthquake as the province is not a major source of the imports, Acting Financial Secretary Carrie Lam said in a Legislative Council session yesterday.

Following the 8.0-magnitude earthquake that shook the province on May 12, frozen pork supply from the area to Hong Kong was down by 500 tons, which represents 3 percent of the city's total frozen pork imports from the mainland.

Lam reassured that the central government would export more pork meat from other provinces to make up for the shortfall.

As for the supply of live pigs, the major exporters are Guangdong, Jiangxi and Hunan provinces although Sichuan is the largest pork-producing province in China.

While the SAR government said the tremor's overall impact on the city has yet to be seen, Lam said the short-term inflation outlook in Hong Kong will hinge in large part on food prices in the international market which have been fluctuating.

Inflation rate has surged 4.8 percent in the first four months of this year, while the rising food prices constitute 39 percent of it.

Lam said food prices have stabilized since May and the priority now is to bring in measures announced in the 2008-09 budget to ease the financial burden on the public.

"We hope to implement the measures as soon as possible. Disadvantaged groups and low-income earners in particular need such measures," Lam said.

The measures include electricity subsidies, a month's rent for low-income families living in public rental housing, and an additional month of welfare payment.

Taking into account these measures, the forecast headline inflation rate for this year is 3.4 percent.

"The government is well aware of upside risks to these forecasts ... and will review the inflation forecasts as more incoming data become available," Lam added.

She said the government encourages local trades to open up new food sources to diversify food supply, while the mainland promises to maintain a stable food supply to Hong Kong.

At the same time, the Commerce and Economic Development Bureau has been in discussion with the Thai government to ensure a stable supply of rice, she added.

(HK Edition 06/05/2008 page1)