Impact of Middle East war on Hong Kong’s inflation limited, finance chief says Hong Kong’s finance chief has said the Middle East war has played only a limited role in driving up local inflation, noting the city’s service-based economy and stable energy supplies from mainland China have mitigated the effects of external shocks. Briefing the Legislative Council on Monday, Financial Secretary Paul Chan Mo-po said the surge in global fuel prices was expected to affect fuel-related consumer prices, pushing inflation higher. “Rising international oil prices will continue to feed through to consumer prices and fuel-related products,” Chan told Legco’s panel on financial affairs. “However, as Hong Kong is a service-oriented economy with relatively low energy dependency, and with stable energy supplies from the mainland, the external impact can be mitigated.” The government last month revised its 2026 forecasts for underlying and headline consumer price inflation from 1.7 per cent and 1.8 per cent to 2.5 per cent and 2.6 per cent, respectively. Lawmakers asked Chan whether the government had considered all factors when revising the forecast. Legislator Webster Ng Kam-wah said the forecast rested on the assumptions that geopolitical tensions would ease and energy supplies from the mainland would remain stable. He warned that persistently high global fuel prices could continue to drive up imported inflation, which occurs when global prices for essential commodities push up local prices. Legislator Ronick Chan Chun-ying said that rising global fuel prices would also raise the cost of petroleum by-products such as plastic bags and dishwashing liquid. He noted that the inflation forecast would ultimately influence pay adjustments for both the private sector and civil servants. The minister said that while rising fuel prices had disrupted global supply chains, the mainland – Hong Kong’s main supplier of food and non-staple goods – had kept supplies and prices stable. He noted that the government had introduced a range of fuel subsidies to help the transport sector cope with persistently high energy costs, including a two-month subsidy on liquefied petroleum gas (LPG) of 50 HK cents (6 US cents) per litre that began on Sunday. The finance chief added that the government would monitor the situation closely and adjust measures if necessary. Government Economist Irina Fan Yuen-yee said the revised forecast fully took into account market trends, pointing to a projected retreat in crude oil futures over the coming one to two months and a “very manageable” food import supply. Paul Chan also said Hong Kong’s economy remained robust in the second quarter, supported by growth in exports that was driven by global demand for artificial intelligence-related electronic products and strong regional trade, as well as solid inbound tourism. However, he warned of downside risks to the economy despite the limited impact of external volatility so far. “The situation in the Middle East remains highly uncertain. Although the war has so far had a relatively limited impact on Hong Kong’s overall economy, it has already driven up international oil prices and inflation pressure,” the minister said. “The US-Iran ceasefire agreement is not on solid ground. Should the situation escalate again, it is expected to intensify volatility in global financial markets and weaken external demand, bringing downside risks to both the global and local economies.” On the property market, he said residential prices had risen since the second half of 2025, with developers becoming more active in land bidding. He added that office transactions and rents had also stabilised, attributing the recovery to companies expanding in Hong Kong, particularly in finance, asset management and digital assets. However, the minister noted that the retail property market showed mixed trends across districts, despite overall stabilisation and rising rents in prime areas. He expected a full recovery would take more than a year. https://www.scmp.com/news/hong-kong/hong-kong-economy/article/3355520/impact-middle-east-war-hong-kongs-inflation-limited-says-finance-chief?pgtype=live (ICE HONG KONG)

Fonte notizia: South China Morning Post