Hong Kong deflation eases but price trend is still down
By Andrea Ricci
Saturday March 23, 9:16 AM
sg.news.yahoo.com
HONG KONG (Reuters) - The rate at which Hong Kong's consumer prices are falling moderated in February due to Lunar New Year spending but economists say that's just a bump on a road that's still headed down.
"The underlying trend is still weak even if you strip out all the special events," said Marvin Wong, economists at ABN Amro.
"Because of the strength of the U.S. dollar, and therefore the Hong Kong dollar, imports are still cheap. Meanwhile, domestic demand is weak and unemployment is high, so it will continue to put downward pressure on prices," he said.
The "special events," namely, a government waiver of property taxes and some utility fees this year, would intensify the pressure on prices, economists said.
Consumer prices as measured by the broadest composite index fell 2.3 percent in February, compared with a 3.5 percent decline in January. Economists had predicted a 2.4 percent fall.
Because Lunar New Year was celebrated in February 2002 but in January 2001, year-on-year declines on prices were exaggerated in January and understated in February due to base effects.
Hong Kong people tend to spend more in the run-up to the holiday. Taking the first two months together, composite CPI declined by 2.9 percent compared with the year earlier.
The government said there was also "a distinct narrowing" in the year-on-year decrease in electricity charges in February.
Power company CLP had rebated fees in January and February this year. But it had also waived fees in February 2001. |
