Hong Kong’s inflation rate rose to 1.20% YoY in November 2025, marking a modest uptick from 1.10% in October. This figure remains below the 12-month average of approximately 1.50%, reflecting a relatively stable inflation environment amid global uncertainties. The inflation trajectory is influenced by moderate domestic demand, stable wage growth, and external price pressures, including energy and food costs.

Drivers this month

• Energy prices contributed 0.15 percentage points (pp) to inflation, reflecting global oil price volatility.
• Housing costs remained steady, adding 0.10 pp, consistent with controlled property market dynamics.
• Food inflation edged up by 0.05 pp due to supply chain disruptions in regional imports.

Policy pulse

The current inflation rate sits comfortably below the Hong Kong Monetary Authority’s implicit target range of 2%, suggesting limited immediate pressure for monetary tightening. The peg to the US dollar constrains independent monetary policy, but the HKMA continues to monitor inflation trends closely.

Market lens

Following the inflation release, the Hong Kong dollar (HKD) showed minor appreciation against the US dollar, reflecting investor confidence in the city’s economic resilience. Short-term government bond yields rose by 5 basis points, signaling modest inflation risk repricing.

Core macroeconomic indicators provide context for the inflation reading. Hong Kong’s GDP growth for Q3 2025 was 2.30% YoY, supported by robust exports and a recovering tourism sector. Unemployment remains low at 3.10%, underpinning steady wage growth of 3.50% YoY. Consumer spending increased by 1.80% YoY, reflecting cautious optimism among households.

Monetary policy & financial conditions

The HKMA maintains its currency board system, pegging the HKD to the USD at 7.85. Interest rates have remained stable, with the base rate at 5.25%. Financial conditions are moderately accommodative, with credit growth steady at 4.20% YoY. Inflation below target reduces pressure for policy shifts.

Fiscal policy & government budget

Hong Kong’s fiscal stance remains prudent, with a budget surplus of HKD 35 billion projected for FY2025. Government spending focuses on infrastructure and social welfare, supporting demand without overheating the economy. Tax revenues have grown 3.80% YoY, reflecting steady economic activity.

Drivers this month

• Energy prices rebounded slightly, reversing a two-month decline.
• Food prices increased due to regional supply chain constraints.
• Housing inflation remained stable, supporting core inflation.

Policy pulse

The inflation print remains below the HKMA’s informal target, implying no immediate monetary tightening. The peg to the USD limits policy flexibility, but the HKMA’s vigilance on inflation expectations remains high.

Market lens

Immediate reaction: The HKD/USD pair appreciated 0.10% within the first hour post-release, while 2-year government bond yields rose 5 basis points, reflecting modest inflation risk repricing.

Looking ahead, Hong Kong’s inflation trajectory will depend on several factors, including global commodity prices, domestic demand, and geopolitical developments. We outline three scenarios for the next 12 months:

Bullish scenario (30% probability)

• Inflation rises moderately to 2.00% YoY by mid-2026, driven by stronger wage growth and sustained consumer demand.
• Economic growth accelerates above 3%, supported by easing global trade tensions and tourism recovery.
• Monetary policy remains stable, with the HKMA maintaining the currency peg and accommodative credit conditions.

Base scenario (50% probability)

• Inflation remains around 1.20-1.50% YoY, reflecting balanced supply-demand dynamics and stable commodity prices.
• GDP growth holds steady near 2.50%, with moderate improvements in employment and consumer spending.
• Fiscal prudence continues, with targeted government spending supporting growth without inflationary pressures.

Bearish scenario (20% probability)

• Inflation falls below 1.00% YoY due to weaker demand and external shocks, such as renewed geopolitical tensions or supply chain disruptions.
• Economic growth slows to below 1%, with rising unemployment and subdued wage growth.
• Financial markets experience volatility, pressuring the HKD and government bond yields.

Hong Kong’s inflation rate of 1.20% YoY in November 2025 reflects a stable macroeconomic environment with moderate price pressures. The inflation level remains below the HKMA’s informal target, allowing for continued monetary stability under the currency peg system. Fiscal discipline and steady economic growth underpin this outlook, while external risks such as commodity price swings and geopolitical tensions warrant close monitoring.

Financial markets have responded calmly, with slight HKD appreciation and modest bond yield increases. The balance of risks suggests a cautious but optimistic outlook for Hong Kong’s inflation and broader economy over the coming year.

Key Markets Likely to React to Inflation Rate YoY

Hong Kong’s inflation data typically influences currency, bond, and equity markets sensitive to interest rate expectations and economic growth signals. The following tradable symbols historically track inflation trends and market sentiment in Hong Kong:

• HKDUSD – The Hong Kong dollar’s peg to the US dollar makes this pair sensitive to inflation-driven monetary policy shifts.
• 0005.HK – HSBC Holdings, a major bank, reflects financial sector sensitivity to inflation and interest rates.
• 0700.HK – Tencent Holdings, representing tech sector exposure to consumer demand and inflation.
• BTCUSD – Bitcoin often reacts to inflation expectations as a perceived inflation hedge.
• USDCNH – The offshore Chinese yuan’s movements correlate with regional inflation and trade dynamics affecting Hong Kong.

FAQs

What is the current inflation rate YoY for Hong Kong?

The latest inflation rate for Hong Kong is 1.20% year-over-year as of November 2025.

How does Hong Kong’s inflation affect monetary policy?

Due to the HKD peg to the USD, Hong Kong’s monetary policy is constrained, but inflation below 2% reduces pressure for tightening.

What are the main risks to Hong Kong’s inflation outlook?

Key risks include global commodity price volatility, geopolitical tensions, and supply chain disruptions impacting food and energy prices.

Key takeaway: Hong Kong’s inflation remains moderate and stable, supporting steady economic growth and monetary policy continuity under the currency peg system.