Hong Kong Deflation Likely Ended In Aug 2003 - HKMA's Yam
Thu Jan 29, 9:46 PM ET
HONG KONG -(Dow Jones)- The head of Hong Kong's de-facto central bank said the territory's five-year-long bout of falling prices appears to have actually ended some months ago.
In his weekly Internet column, Hong Kong Monetary Authority Chief Executive Joseph Yam said: "Consumer prices in Hong Kong may have stopped falling in around August 2003. They seem to have been increasing since."
Hong Kong's consumer price index is still below where it was a year ago. That means that the headline economic data, which is based on year-earlier comparisons, still shows price declines. The index was down by 1.9% in December.
But Yam based his argument on the month-on-month changes in the index. From a level of 93.8 in December 2002, it fell steadily throughout 2003, hitting a low of 91 in August. But it has risen every month since then, reaching 92 in December.
"There has therefore been an increase over the period from August to December 2003 in the composite consumer price index of 1.1%," Yam said, while adding, "At this stage I would not...start to talk about a return of inflation.
"But deflation, taking the word to mean an ongoing (or maybe even a spiralling) process of falling prices, may be over, and the turning point may have been in August 2003," he said.
That turning point would coincide with the broader pick-up in Hong Kong's economy since the city's outbreak of SARS (news - web sites), or severe acute respiratory syndrome, was controlled.
Tourism is on the upswing, thanks mainly to an influx of visitors from mainland China, and the property market has also begun to show life after years of falling prices. In the third quarter of 2003, the economy grew 4% on year, and many economists are expecting annual growth of more than 5% in 2004. |
