Hong Kong’s headline inflation likely to have remained modest in December

Hong Kong’s headline inflation is set to release this week. According to a DBS Bank research report, the consumer price inflation in Hong Kong is expected to have stayed modest at 1.6 percent in the month of December. Even if the labor market has tightened more, labor costs have not increased accordingly.

Similarly, external price pressures were restrained by China’s low import price, for instance factory inflation has been decelerating since its peak in February 2017. The launch of new government subsidies, along with the waning effect of any rise in public housing rentals in September 2016, should diminish the upside risk.

Exports and imports are likely to have risen 8.3 percent and 7.9 percent respectively. Exports to the EU, Japan and China had risen in the months of October and November. Bolstering domestic demand is expected to augur well for imports of goods. The trade deficit is expected to have remained stable at HKD 46.3 billion or 11.1 percent of total imports of goods, stated DBS Bank.

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