OREANDA-NEWS. August 05, 2011. The Bank of East Asia (“BEA”) releases the July 2011 issue of “Economic Analysis”, which examines the cost of living and consumption patterns in Hong Kong from 2004/05 to 2009/10. According to the Analysis, adjusted for the increase in prices, household expenditures in Hong Kong rose by 2.6% in real terms during the five-year period, reported the press-centre of BEA.

However, the findings also revealed that the impact of rising living costs was uneven across household types. Low-income households were hardest hit by food inflation. During the period under review, families living in public and subsidised housing cut their food expenditure by 4.1% while those living in private housing increased food expenditure by 2.3%, both in real terms. The difference in spending can be attributed to that fact that low-income households generally allocated a larger share of their income to food, and their income grew relatively slower.

To assist these households, the government has introduced relief measures in the past years including a public housing rent waiver and electricity subsidies. The introduction of the minimum wage in May 2011 has also been beneficial. As rising food prices are expected to be a persistent problem in the medium term, the government may have to continue subsidising basic necessities.

Meanwhile, real consumption of private housing increased by 4.7% during the five-year period. This is partially due to the fact that private housing owners were able to take advantage of the improving economic conditions to trade up for better housing. However, the consumption power of tenants in private housing has been eroded by escalating rent. In addition, high property prices made it increasingly difficult for them to purchase homes. As such, assisting private housing tenants has become a pressing social issue.

Published on a quarterly basis, BEA’s “Economic Analysis” provides investors with an in-depth look into current market and economic issues. Copies of the report can be downloaded via BEA’s homepage: www.hkbea.com / Corporate Information / Economic Research.