The main contributors to the sharp rise were (i) rents (ii) food (iii) travel.
The HKSAR government made a rather feeble attempt to spin the number saying that it was partly due to a lower base comparison arising from one off concessions granted in July 2010 (in particular a waiver of public housing rentals that month). At best, this is misleading as it is simply another way of saying that CPI was understated a year ago.
- alcohol and tobacco rose 20.1% (there was an increase in the tobacco tax)
- housing rose 16.4%
- food rose 10.7%
- clothing and footwear rose 7.3%
- dining out rose 5.5%
- transport rose 4.8%
- utility costs fell 16% (the government used taxpayers money to subsidise eletricity consumption)
Even if you accept the government's arguement that the effective CPI was "only" 5.8%, this is still higher than the average pay increase (civil servants and a few other small groups excepted), much higher than the yield on good quality HKD bonds and multipiles of HKD bank deposit rates. For investors, the message is pretty clear - if you want to mainatin the real value of your investments, you have to buy risk assets and/or be a borrower. Conservative savers are keeping their money nominally safe, but accepting an assured destruction of real value.