A sustained pick-up in inbound tourism and consumer spending has led to a recent abatement of consumer price deflation, with the composite consumer price index falling 0.1% in June, distinctly smaller than the 0.9% decrease in May.

The Census & Statistics Department said the index, having been on a continuous downtrend since November 1998, showed almost no change in June.

This was caused by an increasing proportion of local retailers and service providers modestly adjusting their prices upwards or trimming discounts. The firming up of import prices and bottoming out of private housing rentals in recent months also contributed to the narrow decline.

Housing rent fall moderates

The smaller year-on-year decline in June was partly attributable to the lower base of comparison brought about by a rebate from an electricity company in June last year. Other factors included a moderated fall in private housing rentals, and enlarged increases in the charges for package tours and for inbound and outbound transport.

For the three-month period ending June, the average monthly rate of change in the seasonally adjusted composite CPI was virtually nil.

Amongst the various index components, housing continued to show a notable year-on-year fall in prices (-6.2%). Durable goods also registered a 1.3% fall.

Electricity, clothing prices up

Price increases were recorded for electricity, gas and water (12.8%), clothing and footwear (10.5%), miscellaneous goods (3.2%), food (2.8%), transport (1.2%), miscellaneous services (1.0%), and meals bought away from home (0.5%). The prices for alcohol and tobacco remained unchanged.

Taking the first six months together, the composite CPI fell 1.3% from a year earlier.

In the second quarter of this year, the composite CPI dipped 0.9% from a year earlier. For the 12 months ending June, the figure was on average 2.2% lower than in the preceding 12-month period.