HONG KONG LEGISLATIVE COUNCIL 11 January 1989
香港立法局
—————一九八九年一月十一日
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and further, what measures are being taken to curb inflation which is now running away in double digit figures?
FINANCIAL SECRETARY: Sir, I share Mr. WONG's concern regarding inflation. With our economy operating close to capacity, inflation has become one of our major worries. In the last three months for which we have complete figures, the Consumer Price Index (A) (CPI(A)) increased, on a year on year basis, by 8.8% in 'September, by 7.6% in October and by 8.6% in November. Preliminary indications are that the December increase will not be out of line with these figures.
I have referred to the CPI(A) in answer to Mr. WONG's question because it is our broadest based indicator of consumer price inflation, relating as it does to the expenditure of roughly 50% of urban households in Hong Kong. It is also the indicator in which goods from China, in particular foodstuffs, have the heaviest weight.
Although it is true that the retail prices of foodstuffs have been increasing faster than consumer prices generally, there is as yet little indication that the prices of foodstuffs from China have been leading the way. Food from China constitutes less than 20% of the food consumed in Hong Kong. Thus, although inflation in the prices of foodstuffs is contributing to general inflation, it is hard to put much of the blame on inflation in the prices of foodstuffs from China.
Sir, turning to the measures that we could take to curb inflation, as I indicated in my speech in the debate on the Motion of Thanks for your opening address to this Council, beyond containing public_expenditure, there are unfortunately few policy options in relation to inflation open to a small externally oriented economy such as Hong Kong, which has become increasingly interdependent with other economies throughout the world. Inflation is an integral, if painful, part of the economic adjustment process. We will, in due course, experience a slowing down of our economy, and with it lower inflation.
Sir, I am afraid this may not provide much comfort to those suffering from the adverse effects of inflation but I would point out that, despite the increase in inflation and slower economic growth in 1988, wages and salaries still increased on average in real terms.
MR. PETER WONG: Sir, are we not deluding ourselves into believing that year on year inflation is only of the order of 8 or 8.5%? My reading of the Finance Committee papers indicates that percentage attributable to inflation is at least double digit, and Civil Service pay adjustments now under discussion are just