THE ECONOMY
imported sources. Reflecting this, import prices were generally on a decline in recent quarters. Domestically generated inflationary pressures from labour costs and rental costs were largely contained. However, with the gradual firming of wages and rentals, and with the pickup in economic growth beginning to add pressure on consumer prices, the moderating trend in inflation tended to be reversed towards the end of 1996.
Reflecting these developments, the Consumer Price Index (A) recorded year-on- year increase of 6.2 per cent and 6.4 per cent in the first and second quarters of 1996 respectively. It then moderated to 5.4 per cent in the third quarter, before picking up to 6 per cent in the fourth quarter. For 1996 as a whole, the CPI(A) rose by 6 per cent, substantially lower than the 8.7 per cent increase in 1995. The increase in the CPI(B) averaged 6.4 per cent, also below the corresponding increase of 9.2 per cent in 1995. Similarly, the average increase in the Hang Seng CPI, at 6.6 per cent, was also significantly slower than the increase of 9.6 per cent recorded in 1995. The Composite CPI, as a combined measure of consumer price inflation covering these three sub- indices, rose by 6.3 per cent in 1996, well below its corresponding increase of 9.1 per cent in 1995.
Chart 12
Consumer Price Indices (year-on-year rate of increase)
Percent
14.0
13.0
12.0
11.0
Consumer Price Index (B)
10.0
9.0
8.0
7.0
6.0
5.0
4.0
Hang Heng Consumer Price Index
Composite Consumer
Price Index
Consumer Price Index (A)
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
1992
!
1993
1994
1991
Consumer price inflation was on an easing trend for most of 1996.
1995
1996
Benefiting from the stronger dollar and low inflation in China, the prices of those components of the CPI(A) with a greater import content, such as food, other consumer goods and consumer durables, generally showed much slower increases than the overall annual average increase. On the other hand, the prices or costs of those components with a greater domestic input content, such as, housing,
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