Covid and closed borders: Hong Kong has avoided inflation. But how long can this last?
- Experts warn that homebuyers and borrowers may have to shoulder bigger financial burden as interest rate increase predicted
- But Hong Kong protected from big rises in inflation as long as border restrictions with mainland China continue, they add
Hong Kong will continue to be shielded from the heat of rising inflation if its border with mainland China remains closed, economists have said as they predicted a slow increase in consumer prices of between 1.5 per cent and 1.8 per cent for June.
But experts also warned that homebuyers and borrowers were likely to shoulder a heavier financial burden on mortgage payments and loans as they forecast local banks would increase interest rates by a range of 0.125 per cent to 0.5 per cent by the end of this year.
Successive interest rate increases by the United States to tame rising inflation, which soared to 9.1 per cent in June, would spark the move.
Hong Kong is an anomaly in comparison with other economies hard hit by high inflation, including the United Kingdom, which notched up a record 9.1 per cent rise in May, Singapore at 5.6 per cent in May and South Korea at 6 per cent in June.
In the first five months of 2022, Hong Kong’s overall consumer price index (CPI) – a measure of changes in the cost of goods and services bought by households – rose by 1.4 per cent compared with a year earlier.
