Retail sales rise 23.2pc as incomes increase

PUBLISHED : Saturday, 13 September, 2008, 12:00am
UPDATED : Saturday, 13 September, 2008, 12:00am

Mainland retail sales continued to grow at an almost record pace as increasing household incomes encouraged consumer spending.

Sales rose 23.2 per cent last month from August last year to 876.8 billion yuan (HK$998.94 billion), the National Bureau of Statistics said. The growth rate was slower than July's 23.3 per cent growth but 6.1 percentage points higher than the same period last year.

Adjusted for inflation, retail sales growth accelerated because of a drop in the consumer price index to 4.9 per cent, down from July's 6.3 per cent and well below February's 8.7 per cent peak.

'Despite the poor performance in the equity and property markets, consumer activity remained buoyant, supported by strong household income growth,' said Jing Ulrich, the chairman of China equities at JP Morgan Securities.

Urban household disposable income climbed 14.4 per cent to 8,065 yuan for the first six months of the year from last year, while rural earnings jumped 19.8 per cent to 2,528 yuan. After adjusting for inflation, they rose 6.3 per cent and 10.3 per cent, respectively.

However, overall consumption remains mixed, Mrs Ulrich said.

Sales of daily necessities appear to be seeing strong growth. Sales of cars and certain luxury items may be slowing, data shows.

For the first eight months, retail sales grew 21.9 per cent year on year to 6.8 trillion yuan, the statistics bureau said. That was up sharply from the 16.8 per cent pace for last year.

Sales in urban areas rose 23.9 per cent to reach 601.5 billion yuan while those in rural areas grew 21.8 per cent to 275.3 billion yuan.

Sales by the catering and hotel sector were up 26.3 per cent and sales of the vehicle sector increased 19 per cent. Sales of oil products grew 49.4 per cent.

Mrs Ulrich said the outlook for consumption growth remained broadly positive.

'As China's government attempts to move from export-reliance growth, we expect that additional resources will be pledged to support domestic consumption,' she said.

The government is aiming to shift its growth from overreliance on investment and exports and concentrate on boosting domestic consumption as external demand weakens. Mainland exports rose 22.4 per cent in the first eight months, down from 27.8 per cent last year.

Sun Mingchun, an economist with Lehman Brothers, said institutional buying might be a more important driver of the strong growth than household purchases since retail sales included buying by households and institutions, such as government and firms.