Modest consumer price increases forecast

 

Government Economist Irina Fan (center), presents the First Quarter Economic Report 2026 alongside Principal Economist Eric Lee and Asst Commissioner for Census and Statistics Edith Chan

Prices of consumer-bought products are expected to rise modestly during the next three quarters of the year as Hong Kong’s economy is expected to continue its robust growth, according to the government’s First Quarter Economic Report 2026.

 “Overall inflation in Hong Kong is expected to remain relatively well anchored, reflecting the city's low energy intensity as a predominantly service-oriented economy, with stable energy supplies from the Mainland helping to mitigate external shocks,” according to the report, presented by the Government Economist, Irina Fan.

Based on the previous quarter’s inflation situation, it estimated the consumer prices inching by 2.5% to 2.6%, up from estimates of 1.7% and 1.8% as announced in the government’s 2026 Budget.

.

In the first quarter of 2026, consumer price inflation stayed modest though it picked up somewhat in March, mainly driven by fuel-related components amid higher international oil prices.

“Price pressures in other components were largely contained. The underlying Composite Consumer Price Index (Composite CPI) rose by 1.4% in the first quarter over a year earlier, following the 1.1% increase in the preceding quarter,” the report said.

“Including the effects of the Government's one-off relief measures, the headline Composite CPI increased by 1.6% year-on-year in the first quarter,” it added.

PINDUTIN ITO PARA SA DETALYE

In the past two months, the Government has introduced short-term, targeted measures to provide timely relief to sectors with relatively high fuel cost.

“The Government remains vigilant to the risks of further escalation of the conflict (in the Middle East), will closely monitor the developments, and will respond further as appropriate to safeguard price stability,” the report said.

Basahin ang detalye!

Other main points of the report:

＊ The Hong Kong economy expanded robustly in the first quarter of 2026, driven by the sustained strong performance in external trade and pick-up in domestic demand. Real GDP grew by 5.9% over a year earlier in the first quarter, accelerating from the 4.0% growth in the preceding quarter. On a seasonally adjusted quarter-to-quarter comparison, real GDP rose notably by 2.9%.

＊ Total exports of goods grew markedly by 23.7% year-on-year in real terms in the first quarter, underpinned by sustained global demand for artificial intelligence (AI)-related electronic products and buoyant regional trade flows in Asia. Exports of services continued to expand solidly by 3.5% in real terms over a year earlier, with broad-based growth across all major service groups.

＊ Domestic demand strengthened across both consumption and investment. Private consumption expenditure saw accelerated growth of 4.9% year-on-year in real terms in the first quarter, reflecting the more entrenched recovery in households' spending. Overall investment expenditure continued to expand at a double-digit rate of 17.7% year-on-year in real terms in the first quarter, alongside the robust economic growth.

＊ The labour market showed modest improvement in the first quarter. The seasonally adjusted unemployment rate edged down further by 0.1 percentage point from the preceding quarter to 3.7% in the first quarter. The underemployment rate also decreased by 0.1 percentage point to 1.6%. Average employment earnings continued to record year-on-year growth in the first quarter.