Hong Kong's inflation pegged to spike to 4.8% in October

Housing component to remain elevated.

According to DBS, Hong Kong's inflation measured by the CPI is projected to rise to 4.8% in October from 4.6% in September. The housing component of the CPI will likely climb at a relatively quick rate of 6.6% (versus an average of 6.6% in 3Q and 6.1% in 2Q).

Here's more from DBS:

While private rentals growth (YoY) have started declining since March after rounds of government intervention, this would only be captured in the CPI at least nine months later, according to historical experience. This means that the housing component would remain elevated for the rest of the year.

Food inflation would continue to be a major contributor as well. This is foretold by the acceleration of food inflation in mainland China in October (6.5% in Oct vs. 6.1% in Sep).

The composite CPI has averaged 4.4% YTD, compared to 4.2% in the same period last year. As we expect inflation dynamics to remain the same for the rest of the year, our full year forecast of 4.5% remains intact.