58 The Economy
To mitigate the impact of inflation, in particular high food prices, on the underprivileged and lower-income groups, the Government introduced various relief measures, including, among others, Government payment of public housing rentals, a rates concession and a subsidy for household electricity charges. Taking out the effects of the one-off measures, the underlying consumer price inflation in 2008 was 5.6 per cent, likewise faster than the 2.8 per cent increase in 2007.
Nevertheless, with the retreat of commodity prices from mid-2008 and the deepening global economic downturn due to the escalation of the financial crisis, global inflationary pressures receded quickly towards the end of 2008. Inflation in Hong Kong showed largely similar developments during the year.
As a broad measure of the overall change in prices, the GDP deflator increased by 1.4 per cent in 2008. The moderate increase in the GDP deflator was mainly due to a deterioration in the terms of trade during most of 2008, resulting from export prices rising at a slower pace than import prices. Taking out the external trade components, the increase in domestic demand deflator was higher, at 2.7 per cent in 2008 (Chart 16).
Chart 16
Main Inflation Indicators (year-on-year rate of change)
00
8
Per cent
LO
6
4
2
NI
0
-2
-4
-6
Composite CPI
GDP deflator
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2004
2005
2006
2007
2008
Consumer Price Inflation receded markedly in the latter part of 2008 amid the continuous tapering of food price inflation, the fall in energy prices and the weaker demand conditions.
Public Finance
Structure of Government Accounts
The Government controls its finances through a series of fund accounts. The General Revenue Account is the main account for day-to-day departmental expenditure and revenue collection. Eight other funds are established by resolutions