Hong Kong Inflation Hits 1.1% in January 2026, Just Under the 2% Target

  ⬤ Hong Kong's inflation rate eased to 1.1% per year in January 2026, landing just under the 2% annual target. The figure is only marginally below target and points to the resilience of Hong Kong's currency board system in keeping price growth close to its implied objective. For comparison, UK CPI recently slowed to 3.03%, reflecting a very different inflation dynamic in a floating-rate economy.

⬤ Looking at the longer trend, Hong Kong inflation has generally hovered near the 2% benchmark over recent years, with the most notable disruption coming in 2020 when the rate briefly turned negative before recovering. Since then, the series has settled into a tighter range, moving above and below the target line without any sharp or sustained breakout. The January 2026 reading of 1.1% places inflation on the softer end of that recent band, but does not signal a meaningful departure from the prevailing pattern. This stands in contrast to Sweden, where inflation dropped to just 0.5%, underscoring how differently disinflation is unfolding across developed markets.

⬤ Data for the chart comes from the Hong Kong Census and Statistics Department, with calculations by Professor Steve H. Hanke at Johns Hopkins University. With inflation modestly under target rather than running above it, the currency board framework appears to be doing what it was designed to do - keeping conditions steady without generating excess price pressure.

⬤ Stable inflation near 2% carries real weight for HKD-linked market expectations. When price growth holds close to target, it limits the risk of abrupt shifts in pricing dynamics and reinforces confidence in the monetary regime, especially at a time when inflation trends are diverging sharply across global economies. A similar pattern of below-target stability can be seen in Sri Lanka, where inflation is holding at 2.4%, though the underlying monetary conditions differ considerably.