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Hong Kong Consumer Prices in Worst Deflation Run Since 2009

Hong Kong Consumer Prices in Worst Deflation Run Since 2009

Hong Kong’s consumer prices contracted for a third month in September, matching the longest deflationary stretch in more than a decade largely because of government relief measures to combat the coronavirus and recession.

The city’s composite consumer price index fell 2.2% last month compared with year-ago levels, according to a government report. That’s more than the -0.3% median forecast among economists surveyed by Bloomberg.

Hong Kong Consumer Prices in Worst Deflation Run Since 2009

This matches a three-month stretch of deflation from June to August 2009.

“Looking ahead, overall inflationary pressures should stay mild in the rest of the year as global and local economic conditions remain weak amid the threat of Covid-19,” the government report said.

The weakness in September largely reflected the waiver of public housing rentals for the month by the Hong Kong Housing Authority, the report said.

Price Declines

The index saw significant year-on-year price decreases for public utilities including electricity, gas and water, as well as for clothing and footwear, housing, durable goods and transportation.

The government has announced a series of stimulus packages this year to support residents and businesses with the economy mired in a recession that started in 2019 amid political unrest. The most recent HK$24 billion ($3.1 billion) stimulus has been criticized by economists and business advocates as too small of a package.

Consumer prices fell in July and August because of the government’s payment of public housing rentals and certain rent waivers in the period, according to the August report.

Excluding the impact of the relief measures, the composite price figure rose 0.5% in September, the report said. This was attributed mainly to rising prices for meals bought away from home as the virus outbreak stabilized, the report said.

©2020 Bloomberg L.P.