In a high-cost-of-living city like Hong Kong, many families work hard to save, hoping to build wealth for the future. But have you ever considered that even as the number in your account keeps growing, your real wealth may be shrinking invisibly? This all stems from an economic phenomenon we hear about often in daily life yet easily overlook—inflation.
Inflation: The Silent Thief of Wealth
Inflation, simply put, is the continuous decline in the purchasing power of money. This means that after a period of time, the same amount of money buys fewer goods and services than before. Hong Kong has gone through a long period of economic development, and prices have risen along with it—this is the most direct manifestation of inflation.
"Even though the cash figure stays the same, once prices rise, your purchasing power falls. It's like running a marathon where, even standing still, the finish line keeps moving further away."
Why Does Inflation Mean "The More Cash You Save, The More You Lose"?
When the inflation rate exceeds bank deposit interest rates, the interest earned on your savings simply cannot offset the loss of purchasing power caused by rising prices. For example, if the annual inflation rate is 3% while your savings account interest rate is only 0.5%, your real purchasing power shrinks by 2.5% every year. This is the truth behind "cash depreciation."
A Real Picture of Inflation in Hong Kong: Supermarkets, Rent, and Cha Chaan Tengs
The simplest way to understand how inflation affects ordinary families is to observe the changes in our everyday spending. Here are some examples you may relate to:
1. Supermarket Shopping: Changes in the Shopping Basket
- Vegetables and fruit: A few years ago, a catty of choi sum might have cost just over ten dollars; now it often costs over twenty dollars or even more. The price increase for imported fruit is even more staggering.
- Meat and seafood: The prices of pork and beef keep rising, making it harder and harder to find fresh, affordable ingredients.
- Daily necessities: For items like detergent, toothpaste, and tissue paper, you'll notice promotions happening less often, while the total bill each time you shop keeps rising.
When you bring the same amount of cash to the supermarket but find you can buy less and less, the impact of inflation becomes obvious.
2. Cost of Housing: The Pressure of Rent and Property Prices
Rent and property prices in Hong Kong have long stayed high, and even amid fluctuations, the long-term trend still points upward. For tenants, rent increases upon lease renewal are the norm; for owners, management fees, rates, and government rent keep rising too. This means that whether you're a tenant or an owner, the cost of housing keeps eating into your income.
3. Cha Chaan Teng Lunch: From "Everyday" to "Luxury"?
Cha chaan tengs are an essential part of daily dining for Hong Kong people. There was a time when a "two-dish rice" or a bowl of "luncheon meat and egg instant noodles" might have cost only twenty or thirty dollars. Now, however, an ordinary lunch often costs forty or fifty dollars, or even more. This reflects rising costs in ingredients, rent, and labour, which ultimately get passed on to consumers.
The table below outlines the estimated increase in some living expenses in Hong Kong over the past decade, giving you a more concrete sense of inflation:
| Item | Average Price About a Decade Ago | Current Average Price (Estimated) | Estimated Increase |
|---|---|---|---|
| 1 catty of choi sum | HK$12 - HK$15 | HK$20 - HK$28 | About 60% - 80% |
| Cha chaan teng lunch (one set) | HK$30 - HK$40 | HK$45 - HK$60 | About 50% - 60% |
| MTR single ticket (short trip) | HK$4.5 - HK$5.5 | HK$5.5 - HK$6.5 | About 18% - 22% |
| Average household monthly rent in Hong Kong | HK$12,000 - HK$15,000 | HK$18,000 - HK$22,000 | About 40% - 50% |
Note: The figures above are estimated, general examples; actual prices vary by district, merchant, and time.
How to Counter Inflation and Protect Your Purchasing Power?
Since inflation is an unavoidable reality, we can't simply ignore it. Besides working to increase your income, it's even more important to learn how to preserve, or even grow, the value of your existing wealth. This includes:
- Investing: Putting part of your idle funds into stocks, funds, real estate, or other assets with potential, aiming for returns that outpace inflation.
- Physical assets: Consider investing in physical assets such as gold. Gold has historically been seen as an effective tool against inflation, since its value is relatively stable and less vulnerable to currency depreciation.
- Upgrading your skills: Invest in yourself, learn new skills, and raise your market value to earn a higher income that keeps pace with the rising cost of living.
萬盛珠寶金行 has been rooted in Hong Kong for nearly seventy years and deeply understands customers' need to preserve and grow their wealth. We specialise in gold trading, and with decades of expertise in the gold market, we can offer you professional advice on gold investment. In the shadow of inflation, choosing the right asset allocation is a key step in protecting the wealth you've worked hard to build.
If you'd like to learn more about how gold investment can help you fight inflation, feel free to contact us at any time or visit our store in person.