Consumer confidence high, despite inflation
Consumer confidence in Hong Kong rose to its highest level since 2008 despite concerns about surging food prices, according to a recent survey.
'The economy is doing really well. There is a lot of optimism because the unemployment rate is dropping and gross domestic product is very high. Now the concern is over prices,' said Oliver Rust, managing director of Nielsen.
Having interviewed 28,000 people in 51 countries and regions, including 504 Hongkongers, the market research company's index showed that consumer confidence in the city jumped eight points to 107 in the first quarter, from 99 in the final quarter of last year.
On a scale of 0 to 200 points, any score above 100 reflects positive consumer confidence, while a reading below 100 indicates negative sentiment.
The index in Hong Kong is currently at its highest point since 2008, and is also higher than the global average of 92.
Rust said the rise in the index reflected increased optimism about job prospects and personal finances.
Hong Kong's jobless rate has fallen to 3.5 per cent from more than 4 per cent about a year ago.
When asked to choose the two things that would concern them most in the next six months, 40 per cent of the interviewees picked food-price inflation, which is at the highest level since the survey began about seven years ago.
One quarter of interviewees expressed concern over the economy, and another 25 per cent wondered about whether they could maintain work-life balance.
Rust said food prices surged 6.3 per cent in the first quarter from a year ago, with meat prices rising even more, causing a drain on consumers' wallets.
'As an everyday necessity, consumers in Hong Kong are already reducing their expenditure on fresh food by 5 per cent to cope with rising food prices.
'Households are spending more on frozen food, highlighting the switch that consumers are making from fresh to frozen [produce] to cope with the situation,' he said.
To counter inflation, 52 per cent of the respondents in Hong Kong said they had delayed upgrading technology such as a personal computer or mobile, up 16 percentage points over the quarter before.
Fifty-four per cent of the respondents said they had reduced their out-of-home entertainment and spent less on clothes.
'I certainly do think inflation will impact consumer confidence, especially their willingness to spend,' Rust said.
However, other factors would also come into play, he said, including property-price changes, the minimum wage - which could affect job prospects - and individual personal finances.
Census and Statistics Department figures show that Hong Kong's overall consumer prices increased 4.6 per cent in March year on year, up from a 3.7 per cent rise in February.
The city's gross domestic product rose 7.2 per cent in real terms over a year earlier in the first quarter of this year.