Cost of Living

Present Situation

Wealth Gap

82.     Despite sustained economic growth in recent years, the widening of the wealth gap is still a source of social discontent.  Poverty in Hong Kong is related to economic restructuring.  After restructuring, there has been a drop in labour market demand for low-educated, low-skilled workers, which has slowed their wage growth.  The Government has been helping low-income families to improve their living standards through housing, education, healthcare and welfare policies and an array of subsidies.  The statutory minimum wage and transport subsidy scheme implemented this year are both designed to raise their income.  In a free, open and mature capitalist economy, the wealth gap can hardly be eradicated.  Investing in education and fostering social mobility are the best long-term solutions to reduce cross-generational poverty.

High Inflation

83.     Our economy has recorded impressive growth since the beginning of this year, with the unemployment rate remaining low.  While the income of the grassroots has increased, we are also facing enormous inflationary pressure.  The average inflation rate for this year is expected to reach 5.4%, which is the highest annual rate since 1997.  The Government will strive to ease domestic inflationary pressure by such measures as cooling the property market and preventing excessive credit growth.

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