XN000022-1989-01-11 — Page 16

WEDNESDAY, JANUARY 11, 1989

14

FEW POLICY OPTIONS OPEN IN RELATION TO INFLATION

RELATION TO

SAID IN THE

THERE ARE FEW POLICY OPTIONS OPEN TO HONG KONG IN INFLATION ALTHOUGH THE PROBLEM HAS BECOME ONE OF THE TERRITORY'S MAJOR WORRIES, THE FINANCIAL SECRETARY, THE HON PIERS JACOBS, LEGISLATIVE COUNCIL TODAY (WEDNESDAY).

NOTING THAT INFLATION WAS AN INTEGRAL PART OF ADJUSTMENT PROCESS, HE SAID THAT BEYOND CONTAINING PUBLIC EXPENDITURE, THE RCONOMIC THERE WERE FEW POLICY OPTIONS IN RELATION TO INFLATION SMALL EXTERNALLY ORIENTED ECONOMY SUCH AS HONG KONG, WHICH HAD

OPEN TO A INCREASINGLY INTERDEPENDENT WITH OTHER ECONOMIES THROUGHOUT THE WORLD. BECOME

OF OUR REPLY TO A

"WE WILL, IN DUE COURSE, EXPERIENCE A SLOWING DOWN ECONOMY, AND WITH IT LOWER INFLATION," MR JACOBS SAID IN QUESTION FROM THE HON PETER WONG.

ΤΟ THOSE

"I AM AFRAID THIS MAY NOT PROVIDE MUCH COMFORT SUFFERING FROM THE ADVERSE EFFECTS OF INFLATION BUT I WOULD POINT THAT, DESPITE THE INCREASE IN INFLAION AND SLOWER ECONOMIC 1988, WAGES AND SALARIES STILL INCREASED ON AVERAGE IN REAL TERMS."

OUT

GROWTH IN

FOR WHICH INDEX (A) HAD

IN SEPTEMBER,

MR JACOBS POINTED OUT THAT IN THE LAST THREE MONTHS THERE WERE COMPLETE FIGURES, THE CONSUMER PRICE INCREASED, ON A YEAR ON YEAR BASIS, BY 8.8 PER CENT BY 7.6 PER ENT IN OCTOBER AND BY 8.6 PER CENT IN NOVEMBER.

H

'PRELIMINARY INDICATIONS ARE THAT THE DECEMBER NOT BE OUT OF LINE WITH THESE FIGURES," HE ADDED.

INCREASE WILL

CONSUMER PRICE OF URBAN

THE CPI(A) IS THE BROADEST BASED INDICATOR OF INFLATION, RELATING TO THE EXPENDITURE OF ABOUT 50 PER CENT HOUSEHOLDS IN HONG KONG.

IT IS ALSO THE INDICATOR IN WHICH GOODS PARTICULAR FOODSTUFFS, HAVE THE HEAVIEST WEIGHT.

FROM

CHINA, IN

PRICES OF GENERALLY,

MR JACOBS SAID ALTHOUGH IT WAS TRUE THAT THE RETAIL FOODSTUFFS HAD BEEN INCREASING FASTER THAN CONSUMER PRICES THERE WAS AS YET LITTLE INDICATION THAT THE PRICES OF FOODSTUFFS CHINA HAD BEEN LEADING THE WAY.

FROM

FOOD FROM CHINA CONSTITUTED LESS THAN 20 PER CENT OF CONSUMED IN HONG KONG, HE SAID.

THE FOOD

"THUS, ALTHOUGH INFLATION IN THE PRICES CONTRIBUTING TO GENERAL INFLATION, IT IS

OF FOODSTUFFS HARD TO PUT BLAME ON INFLATION IN THE PRICES OF FOODSTUFFS FROM CHINA."

MUCH OF

/15

IS THE