Easing off: August saw consumer prices moderate to 4.6% following the Government's implementation of relief measures.

Consumer prices in August rose 4.6% over the same month last year, the Census & Statistics Department says, noting headline inflation has fallen notably mostly due to the alleviating effects of the Government's relief measures.

The Government's payment of three-months of public housing rents and the two-year Employees Retraining Levy suspension from August have together lowered the year-on-year rate of rise in the composite consumer price index by 1.7 percentage points.

The department said today the measures will continue to have a favourable impact on headline inflation in the coming months. Netting out the effects of these one-off factors, the underlying inflation rate was 6.3%, the same as that in July.

After a period of continued upsurge since late 2007 the underlying price inflation showed signs of stabilising in August, as food inflation tapered notably to offset the enlarged increase in private housing rents.

Food prices (excluding meals bought away from home) recorded a 17% year-on-year increase. Foods with large price hikes were rice (63.6%), fresh-water fish (34.1%), beef (33.8%), edible oils (31.5%), canned meat (31.3%), pork (23.8%) and eggs (20.7%).

Increases were also noted in electricity, gas and water (7.1%), meals bought away from home (6.4%), miscellaneous goods (5.4%), transport (4%) and clothing and footwear (1.4%).

Year-on-year price falls were found in durable goods (-1%) and alcohol and tobacco (-0.9%).

Taking the first eight months together the composite consumer price index rose 5.2% over the same period last year.

Looking ahead, the recent easing of world food and energy prices and the US dollar rebound should help ease the pressure from imported inflation. The improvement in labour productivity will also help contain domestically-generated price pressure.

These favourable factors, if continued, will provide an offsetting force against the faster rise in housing costs due to the earlier surges in local private housing rents.