Hong Kong residents tighten their belts

The retail sales picture for August show markedly lower spending for luxury and non-essential items with buyers focusing spending on basic commodities such as food and clothing.

Compared to August 2011, Hong Kong’s buyers spent less this August on furniture and fixtures; food, alcohol and tobacco; jewelry, watches and clocks, and valuable gifts; fuels and motor vehicles and parts. Sales of furniture and fixtures dropped 7.3%; food, alcohol and tobacco sales by 5.6% and jewelry, watches and clocks, and valuable gifts by 5%.

Buyers, however, bought almost 13% more cellphones, IT products electrical goods and photographic equipment; 7.3% more food and other commodities in supermarkets and 7.2% more commodities in department stores. Purchases of miscellaneous consumer goods and footwear, allied products and other clothing accessories rose in the region of 5%.

The lower spending caused the seasonally adjusted volume of total retail sales to dip 0.1% in the three months ending August, compared with the preceding three-month period.

Total retail sales value in August, provisionally estimated at $35.8 billion, increased 4.5% over a year earlier, the Census & Statistics Department said. After netting out the effect of price changes over the same period, the volume of total retail sales increased 3.2%.

For the first eight months of the year, total retail sales rose 10.8% in value and 7.2% in volume year-on-year.

The government said the still-favorable labor market conditions and sustained growth in inbound tourism should continue to render some support to the retail business. It cautioned residents, however, to watch how the persistent weakness in external trade and slower growth of the local economy may impact consumer sentiments.