Told you it was going to be more expensive

Tuesday 23 August 2011, 12.01pm HKT

Whay-hey-hey! Inflation in Hong Kong is now the highest in 15 years.

The official word from the government is inflation is at 7.9%, adjusted to an annual basis.

Told you so in previous roundups.

I said the 41% price increase in tobacco will lead to all sorts of prices going up because of a domino effect. Look how true that turned out to be.

A report from Credit Suisse back in September 2010 has claimed that inflation risk in Hong Kong is forming, and may surprise the market over the next 18 months. Look at now.

Food is the worst-hit for us today (just like I said it would). Meat and vegetable prices have nearly doubled since March/April, even by the government’s own estimates. Things are bound to get worse because Hong Kong imports 95% of its consumables.

So you can’t afford to switch from being a meat-eater to a vegetarian anymore.

Meanwhile, rents in the private housing sector have hit an all-time high, up 10% from last month. It’s been up 10% month-on-month since February by my own calculations.

Right now, baseline rent for private housing is around HK$25 (US$3.21) a square foot (or HK$323 per square metre). For an average 500-square-foot (46.5 square metre) flat, that would be HK$12,500 (US$1,600 or £971) a month. That’s like paying US$58 (£35) for 3 by 6 feet beachmat. Ouch!

Sooner or later, people are going to have to sleep in the streets to make ends meet.

© The Naked Listener’s Weblog, 2011. Image via Professional Adviser HK.

4 Responses to “Told you it was going to be more expensive”

  1. Yaxue C. said

    Or worse, there will be wide-spread violence. China’s agrarian land is fast shrinking thanks to the epic nearsightedness of the GDP craze and rampant corruption, and global food price has only one way to go. Our food price has gone up too across the board but not as bad as HK—knowing not a soul in HK, I have never thought about this: HK probably is going to be among the worst sufferer of this hike.

    I look forward to hearing more oparatic ranting :)

    Afterthought: I have to get serious, very serious, about growing my own vegetables!


  2. Unrest maybe likelier in China than in Hong Kong, mainly because the entire institutional setup there inculcates a dog-eat-dog mentality there – whereas in Hong Kong it’s basically “you’re on your own, buddy” approach to governance.

    Other countries with substantial consumables imports are Singapore (97% imports), Macau (99%) and Taiwan (around 70%), plus a few other small-time Pacific islands might be in the same boat as Hong Kong.

    But, actually, the biggest net importer (at least in the foreseeable future) is China itself – it’s been going through a low-profile, low-intensity drought for three or four years already. It isn’t that China is censoring this news: it’s mainly because the drought is so naturally low in onset and long drawn out that it kind of escapes general notice.


  3. Ed Hurst said

    The drought is truly extensive, almost hemispherical. We have it here in the US Heartland, and apparently Russia does, too. I seem to recall a commodities trader saying it was looking bad from where he sat.


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