HONG Kong's inflation accelerated in October to a nine-year high after rents rose because the government resumed charging a property tax.

Consumer prices rose 3.2 percent from a year earlier, the Census and Statistics Department said yesterday on its Website.

That was double September's pace and more than the 2.7-percent median estimate of 12 economists surveyed by Bloomberg News.

Stock and property market gains and falling borrowing costs have fueled spending, and the Hong Kong dollar's five-percent decline versus China's mainland yuan this year has pushed up import prices. The government restrained inflation from April to September by waiving the tax.

"This is nowhere near the peak," said Glenn Maguire, chief Asia economist at Societe Generale SA in Hong Kong. "The weak US dollar and appreciating Chinese yuan have created this imported inflation dynamic in Hong Kong. With higher oil and food prices, inflation will accelerate."

The benchmark Hang Seng Index has climbed 30 percent this year even after declines this month. The property sub-index has jumped 42 percent.

HSBC Holdings Plc, Standard Chartered Bank Plc, Bank of East Asia Ltd and other lenders cut interest rates in September and this month. The changes tracked moves by the United States Federal Reserve because Hong Kong's currency is pegged to the US dollar.

Food prices jumped 6.6 percent in October from a year earlier after gaining six percent in September, the statement said. Rent climbed 4.1 percent after gaining 0.3 percent.

The inflation rate is the highest since July 1998. Hong Kong's consumer prices fell continuously from December 1998 to June 2004 because of the Asian financial crisis and the severe acute respiratory syndrome epidemic.

"The property tax cut distorted the consumer price index in previous months," said Robert Subbaraman, senior economist at Lehman Brothers Holdings Inc in Hong Kong. "Inflation pressures are building up."

Sarah Tsang, who runs a Thai restaurant in the city's Sai Kung district, raised the prices for her Tom Yum soup, green curry and papaya salad by about five percent four months ago.

"Imported ingredients and cooking utensils from Thailand cost more with the exchange rate," Tsang, 34, said.

Hong Kong's government this month raised its inflation forecast this year to two percent from 1.5 percent.