The Hong Kong CPI for November 2025 increased to 1.20% year-on-year, reversing the near-flat inflation readings of 0.10% in both September and October. This figure, sourced from the Sigmanomics database, reflects a moderate inflationary uptick compared to the 12-month average of 0.90% over the past year. The rebound is significant given the subdued inflation environment since mid-2025.

Drivers this month

• Food prices rose by 2.30%, contributing 0.45 percentage points to overall CPI.
• Housing and utilities inflation edged up 1.50%, adding 0.30 percentage points.
• Transport costs remained stable, with negligible impact.
• Core inflation excluding food and energy rose 0.80%, indicating broadening price pressures.

Policy pulse

Hong Kong’s inflation remains well below the Hong Kong Monetary Authority’s implicit target range of 2-3%. The 1.20% reading suggests limited pressure for immediate monetary tightening. The linked currency peg to the USD and the region’s open capital markets keep policy options constrained, favoring a wait-and-see approach.

Market lens

Immediate reaction: The HKD/USD pair held steady within a narrow 0.10% range post-release. Short-term interest rate futures showed a mild 5 basis point increase in implied tightening expectations over the next 12 months, reflecting cautious optimism about inflation normalization.

Hong Kong’s CPI trajectory over the past year has been volatile but trending upward since mid-2025. The 1.20% November print contrasts with a low of 0.10% in September and October, and a peak of 2.00% in May 2025. This volatility reflects external shocks and domestic demand fluctuations.

Monetary Policy & Financial Conditions

The Hong Kong Monetary Authority (HKMA) maintains a currency board system pegged to the USD, limiting independent monetary policy. The recent inflation rise has not triggered a shift in the base rate, which remains near historic lows. Financial conditions remain accommodative, supporting credit growth and investment.

Fiscal Policy & Government Budget

Fiscal stimulus measures, including infrastructure spending and targeted subsidies, continue to support domestic demand. The government’s budget remains in surplus, allowing flexibility to respond to inflationary pressures without abrupt fiscal tightening.

External Shocks & Geopolitical Risks

Global supply chain normalization and easing commodity prices have helped moderate inflation. However, ongoing geopolitical tensions in the Asia-Pacific region pose risks to trade and capital flows, potentially disrupting price stability.

Drivers this month

• Food inflation contributed 0.45 pp, reflecting higher fresh produce and meat prices.
• Housing and utilities added 0.30 pp, driven by rising rents and electricity tariffs.
• Transport and communication costs were flat, contributing 0.00 pp.

Policy pulse

Despite the uptick, inflation remains below the HKMA’s comfort zone, allowing monetary policy to remain accommodative. The peg to the USD limits direct intervention, but market expectations for gradual normalization have increased slightly.

Market lens

Immediate reaction: The Hang Seng Index (red HSI) dipped 0.30% within the hour, reflecting investor caution amid rising inflation. The HKD/USD pair remained stable, while short-term bond yields edged up 7 basis points.

Looking ahead, Hong Kong’s inflation trajectory will hinge on several factors, including global commodity prices, domestic demand, and geopolitical developments. The following scenarios outline potential paths:

Bullish scenario (30% probability)

• Inflation stabilizes around 1.50-2.00% as supply chains fully normalize.
• Strong fiscal stimulus and robust domestic demand support moderate growth.
• Monetary policy remains accommodative, supporting asset prices.

Base scenario (50% probability)

• Inflation hovers near 1.20-1.50%, with food and housing costs as main drivers.
• Geopolitical tensions cause intermittent supply disruptions but no major shocks.
• Monetary policy remains cautious, with gradual tightening unlikely before mid-2026.

Bearish scenario (20% probability)

• Inflation accelerates above 3%, driven by energy price spikes and wage pressures.
• Fiscal tightening and external shocks dampen growth, increasing recession risks.
• HKMA faces pressure to adjust policy or intervene in currency markets.

Structural & Long-Run Trends

Hong Kong’s inflation has historically been volatile due to its open economy and reliance on imports. Long-term trends show moderate inflation averaging around 2%, with episodic spikes linked to global commodity cycles. Structural factors such as housing supply constraints and demographic shifts will continue to influence inflation dynamics.

The November 2025 CPI reading of 1.20% signals a cautious return of inflationary pressures in Hong Kong. While still below the HKMA’s target range, the rebound suggests that price stability is becoming more fragile amid evolving domestic and external conditions. Policymakers should monitor food and housing costs closely, as these remain key inflation drivers. Financial markets have reacted with mild caution, reflecting uncertainty about the pace of inflation normalization. The balance of risks points to a moderate inflation environment with potential upside if external shocks intensify.

Key Markets Likely to React to CPI

The Hong Kong CPI influences several key markets, including equities, currency, and fixed income. The HSI (Hang Seng Index) often reacts to inflation data due to its impact on corporate earnings and interest rates. The HKDUSE currency pair is sensitive to inflation-driven monetary policy expectations. In crypto markets, BTCUSD can reflect inflation hedging demand. Additionally, the 0700.HK (Tencent Holdings) stock is a bellwether for Hong Kong’s tech sector, sensitive to economic shifts. Lastly, the USDCNH pair tracks broader China-Hong Kong economic sentiment linked to inflation trends.

FAQs

What is the latest Hong Kong CPI reading?

The November 2025 CPI rose to 1.20% year-on-year, up from 0.10% in October.

How does this inflation reading affect Hong Kong’s monetary policy?

Inflation remains below the HKMA’s target range, so monetary policy is expected to stay accommodative in the near term.

What are the main drivers of inflation in Hong Kong currently?

Food prices and housing costs are the primary contributors to the recent inflation increase.

Key takeaway: Hong Kong’s inflation is rebounding moderately, signaling a shift from subdued price growth to a more balanced inflation outlook, with policy and market responses to follow closely.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.

Updated 11/20/25