moderate

(2);

; and

world commodity prices generally and oil

particular remained soft

(3)

product prices in

However,

with the unfavourable exchange rate movements and the firming

up of import prices in the second quarter of 1986 (paragraph

6.3), some increase in the rate of inflation in the second

half of 1986 seems likely.

Import prices

6.3

Despite the softening of

world commodity prices

generally, import prices, measured in terms of the unit value index of imports, picked up in the

up in

second quarter of 1986.

/The

(2) Seasonally adjusted annual rates of price increase in Hong Kong's

major trading partners in 1984, 1985 and 1986:

CPI/Private consumption

expenditure deflator

GNP/GDP deflator

1984 1985

1986 (forecast)

1984 1985

1986 (forecast)

(응) (응)

(8)

(8)

(%)

(8%)

All OECD countries

5.3 4.8

3.5

4.9

4.7

4.0

United States FR Germany

4.1 3.2

2.8

4.1

3.4

2.8

2.5 2.0

0

1.8

2.1

2.3

United Kingdom

4.6 5.4

4.0

3.9

6.1

3.8

Japan

2.1 2.2

0.5

1.3

1.7

1.5

Source: OECD Economic Outlook, May 1986.

According to the official figures released by China's State Statistical Bureau, the inflation rate of China was estimated at 3% in 1984, 9% in 1985 and 8% (year-on-year) in the first quarter of 1986.

(3) Year-on-year rates of increase in world commodity prices (%) :

1985

1986

Q1

Q2

All commodities

-8

-10

Cotton

-16

-20

-11

Petroleum

-2

-2

Iron ore

0

-2

Metal

-6

-3

2 TE747

Q4

Q1

-4

-2

-6

-1

N.A.

N.A.

-13

-5

-1

-7

-8

Source: International Financial Statistics, June 1986.

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