Hong Kong's composite consumer price index in March rose 1.2 percent year on year, while the underlying inflation rate slowed down to 2.6 percent from the average of 3.3 percent in the previous two months, statistics released on Thursday by the Hong Kong Special Administrative Region ( HKSAR) government showed.

The smaller increase in the underlying inflation rate was due mainly to the decreases in private housing rentals and food prices, the Census and Statistics Department said.

The underlying inflation rate is calculated by netting out the effects of one-off relief measures from the year-on-year increase in the composite CPI.

In the first quarter, the composite CPI rose by 1.7 percent over a year earlier.

On a seasonally adjusted basis, the average monthly rate of change in the composite CPI for the three-month period starting in January was virtually nil, compared with a decrease of 0.2 percent for the three-month period starting from December.

The Census and Statistics Department said the demand conditions were relatively weaker and that it expected further easing in consumer prices.

"Inflationary pressures are likely to recede further looking ahead, in the face of the global economic downturn," a spokesman for the department was quoted as saying.

(Xinhua News Agency April 24, 2009)