Hong Kong inflation surges to 16-year high as government warns of more short-term pain -
Inflation in Hong Kong surged to a 16-year high in July and the government warned that the problem would not go away soon.
Consumer prices rocketed 7.9 percent from a year earlier, according to official figures released Monday. That’s the highest rate since 8.4 percent in November 1995.
The Hong Kong government said a suspension in July 2010 of rent paid by people living in public housing distorted the figures. Stripping those relief measures out, the underlying inflation rate was 5.8 percent, still higher than the 5.5 percent underlying rate recorded in June.
Higher private housing rents and pork prices helped push up consumer prices in July.
The government said “inflation is likely to remain notable in the near term” because of high global food prices and local private housing rents.
Asian governments this year have been battling quickening inflation with higher interest rates, stronger currencies and slower growth in spending.
Rising inflation threatens to swell the ranks of people in the region living below the poverty line.
China reported earlier this month that inflation rose to a 37-month high in July, adding pressure on Chinese leaders to cool living costs while keeping economic growth on track.
Vietnam has the region’s highest annual inflation rate at 21 percent while India’s is 8.6 percent. Rapid rises in prices, especially for food, could threaten social stability, which in the past decade has been underpinned by the rising living standards that Asia’s robust economic growth has delivered.
The Asian Development Bank estimates that a 10 percent increase in food prices drags another 64 million people below the $1.25-a-day poverty line.
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