TNAG-1456-FCO40-1980-Future-of-Hong-Kong-annual-report-to-Parliament-on-Hong-Kong-1986 — Page 20

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Earnings in most sectors increased significantly both in

money terms and in real terms.

In line with the improved economic conditions,

private consumption demand has also firmed up, as

reflected by the relatively high growth rates of retained

imports of consumer goods and of foodstuffs,

at an

estimated 8%/% and 11% in real terms in the first nine

months of 1986.

linked rate of

Except for one or two temporary aberrations the

exchange rate of the Hong Kong dollar against the US

dollar has remained stable around the

HK$7.80 to US$1 during the year. However, reflecting the

depreciation of the US dollar, the effective exchange rate

index of the Hong Kong dollar fell from 70.6 in

end-December 1985 to 65.7 on 18 November 1986.

head we?

explains

Despite the depreciation of the Hong Kong

dollar, the rate of inflation has remained low, partly as

a result of soft world commodity prices and of a decline

in the import prices of

of goods from China due to the

devaluation of the Renminbi. Using the Consumer Price

Index (A) as an indicator consumer prices increased by an

average of 2.6% in the first nine months of 1986 over the