Hong Kong's consumer prices rose 1.3 per cent year-on-year in December, up from the half-percentage point increase in November, easing concerns about further deflation, the city's Census and Statistics Department announced Thursday.

Netting out the effects of the government's one-off relief measures, the year-on-year rate of increase in the Composite Consumer Price Index (CPI), or the underlying inflation rate, was 0.3 per cent in December, mainly due to increased food prices. The figure stood at minus 0.3 per cent in November.

On a seasonally-adjusted basis, the average monthly rate of change in the Composite CPI for October to December was 0.8 per cent, compared to 1 per cent for September to November. Netting out the effects of the government's relief measures, the average monthly rate of change in the underlying Composite CPI for October to December was 0.2 per cent, equalling the three-month period ending November.

The department said underlying consumer price inflation turned positive in December after being negative for five months, showing deflationary pressures have receded as the economy recovers.

It forecast inflationary pressures to remain modest in the coming months. As the economic recovery is still at an early stage, both locally and globally, the prevailing excess capacity on the supply side should help to contain the upward pressures on costs and prices.