5 culprits that could push inflation higher

It may hit an average of 4.3%.

According to Hang Seng Bank's Hong Kong Economic Monitor, renewed capital inflows and further asset market rallies pose upside risk to the inflation outlook for the year ahead.

Here's more from Hang Seng Bank:

We believe inflation is likely to be higher by mid-2013 than it  is now in the territory. This is on account of several driving factors: (1) rebound in
Mainland’s grain prices; (2) renewed strength of the Chinese RMB against the Hong Kong dollar; (3) unfavourable base effect; (4) rising rental rates following the fresh round of the property-cooling measures; and (5) a narrowing negative output gap.

Headline  inflation will rebound gradually throughout next year, reaching 5% by year end and  averaging 4.3% for the whole of 2013.