The Census and Statistics Department (C&SD) released June 22 the Consumer Price Index (CPI) figures for May 2007. According to the Composite CPI, overall consumer prices rose by 1.2% in May 2007 over a year earlier, smaller than the 1.3% increase in April.

Meanwhile, the Budget measure of rates concession for the first two quarters of 2007/08 (i.e. April to September 2007) continued to carry effect in May. Netting out this factor, the year-on-year increase in the Composite CPI was 2.3%. This measure would continue to carry impact on the CPI until September this year.

Analysed by sub-index, the year-on-year rates of change in the CPI(A), CPI(B) and CPI(C) were +0.7%, +1.3% and +1.7% respectively in May 2007, which compared to +0.7%, +1.3% and +1.9% respectively in April. Netting out the effect of the rates concession, the year-on-year changes in the CPI(A), CPI(B) and CPI(C) were +2.1%, +2.3% and +2.6% respectively in May.

For discerning the latest trend in consumer prices, it is also useful to look at the changes in the seasonally adjusted CPIs. For the 3-month period ended May 2007, the average monthly rates of change in the seasonally adjusted Composite CPI, CPI(A), CPI(B) and CPI(C) were +0.6%, +1.7%, +0.2% and -0.1% respectively. The corresponding rates of change for the 3-month period ended April 2007 were -0.2%, -0.3%, -0.2% and -0.1%.

Amongst the various CPI components, year-on-year increases in prices were recorded in May 2007 for clothing and footwear (3.7% in the Composite CPI and 1.5% in the CPI(A)), miscellaneous goods (1.3% in the Composite CPI and 1.6% in the CPI(A)).

On the other hand, year-on-year declines in prices were recorded in May 2007 for durable goods (-4.3% in the Composite CPI and -4.7% in the CPI(A)).

As for housing, the Composite CPI rose by 0.9% over a year earlier but the CPI(A) fell by 0.3%. However, for transport, the Composite CPI fell by 0.5% over a year earlier but the CPI(A) rose by 0.1%.

Taking the first five months of 2007 together, the Composite CPI rose by 1.5% over a year earlier. The corresponding increases in the CPI(A), CPI(B) and CPI(C) were 0.4%, 1.7% and 2.4%.

For the 3 months ended May 2007, the Composite CPI rose by 1.6% over a year earlier, while the CPI(A), CPI(B) and CPI(C) rose by 1.2%, 1.6% and 2.1% respectively.

For the 12 months ended May 2007, the Composite CPI was on average 1.9% higher than in the preceding 12-month period. The respective increases in the CPI(A), CPI(B) and CPI(C) were 1.3%, 2.0% and 2.4%.

ommentary:
A Government spokesman pointed out that the headline consumer price inflation remained low in May, as the rates waiver continued to carry effect. The spokesman added further that even after excluding this special factor, the underlying consumer price inflation rate was still moderate, actually down marginally in May from April.

The spokesman believed that food prices are likely to remain a volatile component within the CPI in the period ahead, although the trend in the near term is for a general pick-up alongside the higher food inflation in the Mainland and renminbi appreciation.

Yet the spokesman also pointed out that the sustained rise in labour productivity and a more steady rise in housing cost would provide some cushion to the price pressures from this front. In addition, the rates waiver until September this year and other one-off measures to be implemented later this year would continue to keep the headline inflation down in the coming months.