ENG-1999 — Page 85

THE ECONOMY

On a year-on-year comparison, the decrease in the Composite Consumer Price Index was enlarged from 1.8 per cent in the first quarter of 1999 to 4.0 per cent in the second quarter, and further to 5.9 per cent in the third quarter. In the fourth quarter, the decrease narrowed back to 4.1 per cent, due in part to dissipation of the effect of a 50 per cent cut in the rates payable for the third quarter, and in part to a low base of comparison a year earlier. For 1999 as a whole, the Composite CPI was down by 4.0 per cent, in contrast to a rise of 2.8 per cent in 1998. This was the first annual decrease recorded since the data series reflecting inflation was available in 1982.

The three sub-indices, namely the CPI(A), CPI(B) and CPI(C) (previously known as the Hang Seng CPI), exhibited a similar pattern of movement. Their respective year- on-year declines widened from 1.5 per cent, 2.4 per cent and 1.2 per cent in the first quarter of 1999 to 3.5 per cent, 4.7 per cent and 3.5 per cent in the second quarter, and further to 5.0 per cent, 6.7 per cent and 5.8 per cent in the third quarter. In the fourth quarter of 1999, these decreases also tapered, to 3.0 per cent, 5.0 per cent and 4.2 per cent. For 1999 as a whole, the CPI(A), CPI(B) and CPI(C) fell by 3.3 per cent, 4.7 per cent and 3.7 per cent respectively, as compared to the increases of 2.6 per cent, 2.8 per cent and 3.2 per cent in 1998.

The GDP deflator, as a broad measure of overall inflation in the economy, fell by 5.6 per cent in 1999. This contrasted with an increase of 0.9 per cent in 1998. Within it, the domestic demand deflator eased by 2.2 per cent in 1999, following a 1.0 per cent rise in 1998. The price deflators for private and government consumption expenditures both declined. Also, the price deflators for exports of goods and services went down further.

Chart 12:

Main inflation indicators (year-on-year rate of change)

Per cent

15

10

5

0

-5

Composite CPI

GDP deflator

-10

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 QI Q2 Q3 Q4

1993

|

1994

1995

1996

Prices eased distinctly further during the course of 1999.

1997

1998

|

1999

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