The following chart shows the composite Consumer Price Index of HK

Let us define a point A . i,e Sep 03 and point B Sep March 2008.

The period between A and B has been one roller coaster ride.

We see that after Sep o3, there has been a sharp fall in composite CPI, indicating that the overall purchasing power has risen.

However in the month of March 04, CPI has risen , but not to the level Sep 2003.

From March 2004 to Jan 2005 there has been little variation in CPI, it wasnt much of a significance.

However during mid 2005 and mid 2007, the CPI has risen steadily , leading to a loss of purchasing power.

After that CPI had fallen , but not to the level of Mid 2003.

From mid 2007 to March 2008, it has been rising steadily leading to a loss in purchasing power.

b) A subcontractor who has signed to recieve a fixed payment would lose.

It is due to a rise in CPI, the same amount of money would purchase even lesser goods.

Since he recieves a fixed payment, he will be losing the value of money due to rising CPI and he loses his purchasing power,

ii) The government who gives fixed amounts of social assistance will gain.

It will be less expensive for the government to be providing the same amount because the value of the money is lesser than before and a government who provides fixed assistance will have no problems arranging the funds because of low cost.