Plummeting gold prices brought the city an additional HK$4.45 billion in retail sales last month as consumers took advantage of the slump to snap up jewellery and watches, although jewellers expect the gold craze will now taper off.
Hong Kong's retail sales jumped almost 21 per cent to HK$43.1 billion in April, the highest in 16 months, excluding February's skewed figure.
A government spokesman said the rise was largely down to a 68 per cent rise in sales of jewellery, watches and other luxury goods because of a jump in gold-related sales.
Gold contributed the bulk of the growth, given that the category only saw a sales increase of 10 to 11 per cent in the past months, the Hong Kong Retail Management Association said.
Caroline Mak Shui-king, the association's chairman, said she expected gold ornaments to continue to support retail sales this month, as jewellers reported high single-digit growth. However, she said, the growth was unlikely to be sustained.
"Apart from gold and jewellery, the overall atmosphere of the retail market isn't really that good," Mak said.
Sales volume of vegetables and fruits dropped 12 per cent last month despite an increase of 8.4 per cent in value, meaning most of the growth came from inflation.
Alcohol and tobacco, which have been hit since the mainland government clamped down on extravagant lifestyles among officials early this year, continued to shrink in sales and volume. The sales of popular items such as smartphones and computers also fell because of a lack of new product launches.
William Wong Wai-sheung, the chief executive of jewellery chain Luk Fook, said business this month was still good as gold prices fell again after a rebound earlier in the month. However, he expected sales to return to normal next month.
Gold ornaments, especially traditional bangles used at weddings, were swept up by local and mainland shoppers as gold prices lingered below US$1,400 an ounce after hitting a low of US$1,321 last month. However, analysts said the consolidation was coming to an end and gold prices would resume its rising trend soon.
Retail sales rose 15.5 per cent in the first four months of this year, although Mak said she expected the gain to slow to about 13 per cent for the whole year.
Department store chain Sincere is looking to add at least three outlets in the near term. However, Mak said sizeable commercial properties were scarce and the outlook for department stores was challenging because of slack local consumption.