Hong Kong inflation pegged to surge to 3.8%

Blame it on base effects from CNY.

According to DBS, inflation measured by the CPI is expected to accelerate to 3.8% YoY from 3.0% in January.

Component-wise, food inflation will jump quite notably in February due to Chinese New Year effects.

In China, food inflation rose 6.0% in February versus 2.9% in January. Housing inflation – in particular private housing rentals – remains sticky.

Here's more from DBS:

Private residential rents are still charging up (HK$22.8/sqft in January), and the trend will probably Continue since government clampdowns on the property market have encouraged some potential buyers to rent for the time being.

The pace of rental inflation in the next few months may even exceed property price inflation, putting upward pressure on the CPI.

Meanwhile, transport inflation will pick up as soon as March as this week’s 4.9% bus fare hike will add a maximum of 0.1% to March’s CPI.

Minimum wages will be revised to $30 per hour from $28 currently, adding further inflationary risks.