TNAG-1267-FCO40-1616-Economic-situation-in-Hong-Kong-1983 — Page 283

Introduction

CHAPTER 6: PRICES

6.1

Despite

the

(2)

·

(1).

depreciation of the Hong Kong dollar

since the end of 1982,

1982, the rate of inflation increased only

slightly in the first half of this year

As indicated by

the various Consumer Price Indexes

the rate of increase

in prices averaged about 10% in the second quarter compared

with the same quarter last year. This is slightly higher than the year-on-year rate of increase of 9% recorded in the first

quarter of this year and in the fourth quarter of last year.

6.2

There are several favourable factors. First, as the

growth rate of domestic demand in the first half of this year remained relatively slow (paragraph 2.12), it was not imposing strong pressure on the supply of domestic resources.

the growth rate

rate of the money supply slowed down during

Second,

the

/first

(1) Through its effect on import prices, a depreciation of the Hong Kong dollar would push up the rate of inflation. But because it takes time for an increase in import prices resulting from a depreciation of the Hong Kong dollar to work through to the retail level, consumer prices would be affected only after a time lag.

(2)

There are three consumer price indexes: Consumer Price Indexes (A) and (B), and the Hang Seng Consumer Price Index. The characteristics of the three indexes are as follows:

Approximate proportion of urban households

Monthly expenditure range

in 1979/80

covered

(*)

($)

CPI (A) CPI (B)

50

1,000 to 3,499

30

3,500 to 6,499

Hang Seng CPI

10

6,500 to 19,999

55