Nomura noted that HK's headline CPI inflation unexpectedly rose to 2.4% y-o-y in October from 2% in September.
It said the deceleration of electricity, gas and water price fall (-4.7% y-o-y in October from -10.1% in September) was the main reason and this was owing to the dissipation of the special fuel rebate in electricity, which took effect in August-September 2015. Housing (4.0% y-o-y in October from 3.5% in September) also pushed up the headline index, mainly because of the withdrawal of the government's relief measures (rates concession).
Reflecting higher October CPI inflation, Nomura raised its 2015 CPI inflation forecast to 3% from 2.7%. However, it maintained its 2016 forecast of 2.5%, with downside risks owing to a stronger HKD and weaker housing markets.
The research house expects HKD (in trade-weighted terms) to continue to appreciate with the Fed lift-off because of the de facto HKD/USD peg. Also, negative sentiment on the property market from expectations of a Fed lift-off may lower housing accommodation costs.
24/11/2015 18:01
[I-bank focus]Nomura revises up HK 2015 CPI to 3% from 2.7%
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