Inflation may soar to 4.5% in 2011

Although economic growth could hit 5% this year after expanding 6.8% last year, the Government should focus on "fighting inflation".

According to OCBC, Financial Secretary Tsang said, inflation could accelerate to 4.5% yoy this year from +2.4% in 2010. There is also the risk of a property bubble. Relief measures included an electricity subsidy, waiver of property rates, HK$6k injection into the mandatory pension fund per account, but no one-off income-tax rebate this year, while car registration tax and tobacco duty were hiked.

The projected surplus is HK$71.3 billion, and the fiscal reserve will rise to HK$591.6 billion for 2010/11.