Hong Kong inflation hits three-year high

Wednesday, 22 June 2011 00:00 - - {{hitsCtrl.values.hits}}

HONG KONG, (AFP):Hong Kong said Tuesday its inflation hit 5.2 percent year-on-year in May, its highest level since July 2008, and warned that prices will continue to go up due to soaring food costs and housing rent.

The rate was up from 4.6 percent in April, the Census and Statistics Department said in a statement, the highest since July 2008 when inflation jumped 6.3 percent.

The hike was driven largely by rises in the cost of alcoholic drinks and tobacco, up 19.8 percent, food (10.1 percent) and housing (6.1 percent).

A government spokesman said inflation “is likely to go up further in the coming months”, due to price pressures from both external and domestic factors.

“The rising inflation in Hong Kong has to be viewed against the background of elevated global food and commodity prices amid abundant liquidity and the continued robust expansion of the local economy,” the spokesman said.

“The government will remain vigilant on the inflation situation, particularly its impact on the lower-income people,” he added.

The southern Chinese city’s finance chief John Tsang on Sunday warned that the government may take further measures to curb rising property prices if necessary, amid fears of an asset bubble forming.

Property prices have surged past the record levels seen in 1997 prior to the Asian financial crisis, with the rocketing cost of owning a home in the teeming city of seven million a major headache for the government.