July Sees 2.3% Deflation

Overall consumer prices in July fell 2.3% on a year earlier, after a 0.7% rise in June, the Census & Statistics Department announced today.

The fall was mainly due to the Government's public housing rental payment and Housing Society's rent waiver for estate tenants.

Netting out the effects of the Government's one-off relief measures, the year-on-year increase in July's underlying inflation rate was 0.2%, smaller than the 1.2% growth in June.

The department explained the smaller increase was mainly due to a drop in the costs for meals bought away from home and enlarged decreases in local transport fares.

July saw year-on-year price falls for electricity, gas and water, housing, clothing and footwear, transport, durable goods as well as meals bought away from home.

However, prices for food other than meals bought away from home, miscellaneous goods and services, as well as alcoholic drinks and tobacco rose.

The Government said the underlying consumer price inflation rate eased notably in July as economic conditions remained very weak amid the COVID-19 pandemic.

Prices of meals bought away from home turned to a year-on-year decline in July - the first decline since early 2004 - as the business environment became even more austere given the recent surge in local COVID-19 cases.

The decline in transportation costs enlarged visibly due to the extra MTR fare rebate starting from the month. Price pressures on many other major CPI components also receded further.

Both external and internal price pressures are expected to remain subdued in the rest of the year amid the weak global and local economic conditions.