HONG KONG: Hong Kong's inflation continued to ease, as consumer prices rose 1 percent in January over the same month last year, down from the 1.3 percent increase in December, the Census & Statistics Department said yesterday.

Netting out the effects of the Government's one-off relief measures, the underlying inflation rate was virtually nil, compared to the 0.3 percent year-on-year rate of change in December, mainly because of the higher prices in January last year around the Lunar New Year holiday, which led to a higher base of comparison.

"Inflationary pressures remained rather modest on entering 2010. Yet with the economic recovery gathering pace, inflationary pressures are likely to become slightly more visible going forward," said a government spokesman.

"Nevertheless, as resources in the economy are still under-used in the early stage of recovery, upward pressures on prices and costs should remain contained in the near term," he said.

The biggest price increase was mainly due to more families having used up their government electricity subsidies from the days of last year's financial crisis, as some households used up the full amount of government's one-off electricity charge subsidy.

Year-on-year price hikes were recorded in electricity, gas and water (56.8 percent), alcohol and tobacco (22.9 percent), clothing and footwear (2.9 percent), miscellaneous goods (1.9 percent), meals bought away from home (0.3 percent) and transport (0.3 percent).

Durable goods and food, on the other hand, were slightly cheaper in January compared to the previous month. Housing prices remained unchanged over a year earlier, according to the data.

Price drops were found in durable goods (-2 percent), miscellaneous services (-1.9 percent) and food (excluding meals bought away from home) (-1.6 percent).

For the three months ending January the composite consumer price index rose 0.9 percent over a year earlier. The corresponding rate of change after netting out the effects of the Government's relief measures was virtually nil.

As for the 12 months ending January, the composite consumer price index was on average 0.4 percent higher than in the preceding 12-month period. The corresponding increase after netting out the effects of the Government's one-off relief measures was 0.6 percent.

(HK Edition 02/24/2010 page2)