37
Wednesday, October 17, 1973
I note that the steady stream of Merchant Banks setting up in
Hong Kong continues and this is a fair indication of international estimates
of the importance and soundness of Hong Kong as a regional financial centre,
But it is the rise in prices which is now causing most immediate
concorn to all of us. The plain fact of the matter is that the world is
going through a particularly inflationary phase, and Hong Kong cannot insulate
itself from it.
This world inflationary trend has coincided with a significant
rise in the prices being charged for imported foodstuffs. This is partly a
result of world grain shortages, partly the exceptional climatic conditions
of this summer in Hong Kong and South China, and partly due to new pricing policies
which have brought the price of perishable foodstuffs in Hong Kong to levels
comparable with prices elsewhere in the world. We must face the fact that
those who sell us their goods are just as entitled to charge the going rate
for them as we are entitled to do the same for our exports.
In this situation we will of course watch closely to see whether the
prices of foodstuffs not subject to normal international competition get out
of line with prices elsewhere. We can eliminate artificial restrictions on
the source of supply of food and this we have done in the case of rice. To
some extent we can discourage exploitation of the uncertainties of the
food market by excessive mark-up, and this too has been done in the case
of rice. The rise in prices should encourage an increase in domestic supplies
of produce and this in time may help. But basically, we are in the
grip of