HK's inflation may slow down on tax cut

Hong Kong's inflation was expected to slow down from the nine-year high thanks to the government's efforts to reduce housing costs through a property tax concession for the first three months of the year.

Economists estimated Hong Kong's consumer price index (CPI) jumped 3.1% year-on-year in January, down 0.7% from the record high in December last year. The Census and Statistics Department will release the figure later today.

However, Paul Tang, chief economist at Bank of East Asia Ltd, predicted CPI would be higher than the estimate, as the property tax cut brought an artificial influence on housing rents, which soared 13% from a year earlier in 2007.

Yan Aiqun with Heng Seng Bank stroke a similar note that the pressure on prices rise remained huge on concerns over the increasing food and energy costs, an over-heated local property market and the decline in Hong Kong dollar.

The government would announce the tax concession and other financial conciliation measures on Feb. 27 with an aim to control the whole-year CPI below 4%, he added.