Retail sales in Hong Kong last month rose to a new high of HK$33.1 billion, surpassing even the boom in April.
But an industry chief warned the 'retail bubble' could burst as it was being driven primarily by mainland tourists.
While retail sales jumped 27.8 per cent year on year, most of the growth was fuelled by inflation and spending by tourists.
Sales volumes of items of local consumption, such as food, drinks, tobacco and furniture, have actually shrunk.
Sales of expensive goods, including jewellery and watches, exceeded HK$700 million last month, way ahead of popular electronic products such as smartphones and cameras, although the sales volume of consumer durable goods surged 1.5 times in May from a year ago.
While sales this month are expected to enjoy a year-on-year growth of 24 to 25 per cent and average growth for the year could surpass 20 per cent, the Retail Management Association warned that a reduction in luxury tax on the mainland could be a game changer.