Inflation in Hong Kong

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Inflation in Hong Kong
In recent years, inflation has been a serious problem in Hong Kong. By definition, inflation refers to a persistent, sustained rise in the general level of prices and, consequently, resulting in a fall of the purchasing power of the currency (Dictionary.com, 2013). According to the Annual Report on the Consumer Price Index 2012, the yearly average of the Composite Consumer Price Index (CPI) has increases of 5.3% and 4.1% over 2010 and 2011 respectively (Census and Statistics Department, 2012). In January 2013, the Composite CPI increased by 3.0% compared with the same period of last year. These figures are considered to be rather unfavorable as inflationary pressure is concerned. Inflation causes mainly negative economic and social problems in Hong Kong. Two of the most crucial impacts will be discussed in the following, and they are the heavy financial burden brought to the people and the damage suffered by the small and medium-sized enterprises. One of the most significant impacts caused by inflation is the heavier financial burden. As inflation rate stays steadily at a high level, a greater cost of living is resulted. The prices of products and services are generally raised. There have been weighty increases of rents and food prices (China Daily, 2011). It was measured that year-on-year increases in prices in January 2013 for housing and foodstuff were 5.0% and 7.2% respectively (Fontes, 2013). These two expenses are essential for most people’s living; their upsurge burdens the citizens financially in a great sense. Unfortunately, the growth in wages cannot catch up with the accelerating inflation rate. It is stated that inflation nullified more than 50% of the income increases’ value in September 2011 (Hong Kong Business, 2012). Hong Kong people have to suffer from a heavier monetary burden as the general prices for living goes up while there is no extra money to offset the pressure. Their standard of living is actually degraded....
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