Official figures show Hong Kong's consumer prices rose by 1.8 percent year-on-year in July, down from the 1.9 percent increase recorded the previous month.

The underlying inflation rate in July was 1.6 percent, slightly lower than the 1.7 percent recorded in June.

The Census and Statistics Department said the cost of alcoholic drinks and tobacco jumped by 18.4 percent from a year ago, marking the steepest price hikes.

These were followed by a 6.6 percent increase in the cost of clothing and footwear and a 3.7 percent rise for restaurant meals and takeaway food.

However, the cost of durable goods fell 3.3 percent from the same period a year ago.

"Looking ahead, overall inflation should stay moderate in the near term. External price pressures should recede further," a government spokesman said.

"While domestic business cost might face some upward pressures alongside the economic recovery, it should remain largely moderate in the near term."