In September, the overall consumer price index in Hong Kong rose by 2.2% annually, slowing down by 0.3 percentage points monthly.

Dah Sing Financial Group (00440.HK) Chief Economist and Strategist Wen Jiawei stated that the increase in the overall consumer price index in September was slightly lower than the market and the bank's respective expectations of 2.4% and 2.3%. Excluding one-off relief measures, basic inflation rose by 0.9% annually and also slowed down by 0.3 percentage points monthly.

Wen Jiawei mentioned that overall food prices slowed down by 0.8 percentage points annually to 1%, reaching the lowest increase since January this year. Basic food prices shifted from rising to falling, ending three consecutive months of increases; the growth rate of dining out and takeaway prices also slowed down to the slowest since June 2021 at 1.8%; housing prices continued to grow for three consecutive months at 3.3%, with private housing rents maintaining a 2.4% increase, remaining at a high level since the beginning of the epidemic in March 2020; the prices of electricity, gas, and water further expanded to 6.5%, the largest increase since July last year; prices of clothing and durable goods narrowed their decline, with durable goods prices falling for twenty-five consecutive months.

Wen Jiawei explained that inflation in Hong Kong in September further slowed down, mainly due to the significant drop in food prices, which account for a high proportion of consumer spending, affected by the high base effect of the same period last year. Basic inflation has been maintained at around 1% so far this year, reflecting continued mild inflationary pressure. Continued consumption by mainland Chinese visitors in Hong Kong, coupled with changes in the pattern of large-ticket spending by visiting tourists, may lead to further narrowing of the increase in dining out and takeaway prices, while durable goods, miscellaneous items, and clothing and footwear inflation remain subdued, all of which may reflect weak local consumer sentiment.

Wen Jiawei also pointed out that private housing rental prices continue to rise, helping to offset the impact of falling prices in certain segments of the consumer price index. The effects of the government's waiver of rates will disappear in the fourth quarter, and the overall inflation rate is expected to fall below 2% in the fourth quarter, with an estimated full-year inflation rate of around 1.8% in 2024.

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