Hong Kong, a former British colony, has always been considered one of the most expensive cities in the world because of its Western lifestyle. Now the situation is reversed.
For example, bananas imported from the Philippines sell for HK$ 5.32 per 500 grams in Beijing compared to HK$ 4.18 in Hong Kong.
A Big Mac at McDonald's in the Chinese capital costs HK$ 16.50 in the city compared to HK$ 15.10 in Hong Kong.
A box of fresh pork chops sells for over 30 yuan in the Hualian supermarket, at least 10 per cent higher than in Wellcome or ParknShop in Hong Kong.
A pack of 10 imported Gala apples costs as much as 70 to 80 yuan in Hualian, yet are no more than HK$ 20 in Hong Kong.
China’s National Bureau of Statistics announced earlier this year that the mainland's consumer price index (CPI) rose 3.3 per cent last year. In December, it rose 4.6 per cent from a year earlier after hitting a 28-month high of 5.1 per cent in November. Food prices rose even more, 9.6 per cent in December and 11.7 per cent in November. In fact, many economists believe the real inflation rate could be higher than the official figure.
The mainland is also likely to report even higher CPI increases for last month and this month, pushed up by food price rises ahead of the Lunar New Year, on 3 February.
Experts note that as the government holds the yuan at a stable exchange rate with the US dollar, the value of the former is underestimated, reducing purchasing power, especially for imported goods.
Conversely, the Hong Kong dollar is free to follow the market. Hence, the yuan has appreciated against the HK dollar. Today, 100 HK dollars gets only 85 yuan compared with 110 yuan a decade ago.
At the same time, monthly per capita disposable income in Beijing was 2,422 yuan (HK,867) last year, around two fifths of the average monthly pay in Hong Kong. The figures in Shanghai and Guangzhou are 2,655 yuan and 2,554 yuan respectively.
Families in Guangzhou and Shenzhen now practice cross-border shopping, which has helped retail sales in Hong Kong jump 18.3 per cent last year, this according to sales data issued by the city's Census and Statistics Department.
Traditionally, Hong Kongers were the ones travelling to the mainland on weekends to hunt for cheaper goods and bargains.
Forecasts for 2011 are gloomy though. Experts agree that inflation will increase, at least until June. Since the government said it would not appreciate the value of the yuan, this will inevitably lead to higher prices.