China's retail sales increased 22 percent in April from a year earlier, as consumers are paying more for basic necessities and are more willing to spend in the face of rising inflation.
Sales of foodstuffs and beverages climbed 25.3 percent year-on-year, with spending on grain and edible oil surging by 36.3 percent, the National Bureau of Statistics (NBS) said. The expansion came amid rising food price inflation, which climbed more than 22.1 percent year-on-year in April.
"With inflation at a decade-high level, it is not surprising to see nominal retail sales reaching a decade-high as well," Goldman Sachs' economists Song Yu and Liang Hong said in a research note. They estimated retail sales' April growth stood at 13 percent year-on-year, after being adjusted for inflation.
Rising inflation not only forced consumers to pay more for daily necessities, but also seemed to encourage spending on durable and luxury goods.
The April report shows sales in furniture, automobiles, gold and silver jewelry increased 37.2 percent, 25.7 percent and 41 percent, respectively.
The resilient growth was also due to the growing willingness to consume in a high-inflation environment, Citigroup's economist Shen Minggao said.
China's consumer price index rose 8.7 percent in February to a 12-year record high. Although it dipped slightly in the following two months, consumer inflation still stood at 8.2 percent for the first four months. In contrast, the benchmark one-year lending rate was 7.47 percent, representing a negative interest rate.
Cao Shuang, an anesthetist from a hospital in Shanghai, spent 600 yuan in February to buy a gold pig as a mascot for her newborn baby.
"It will bring luck and is also a good investment, as gold is becoming more valuable these days," Cao said.
In April, sales for construction and decoration materials declined 1.2 percent compared with a year ago, a dip viewed as reflecting the property market's weakness.
While housing prices have continued rising nationwide in recent months, industry insiders say the sales volume of new homes has been sliding, as buyers have been opting to wait for a correction in housing prices.
There has also been a slowdown in mortgage loan growth for the first quarter in Shanghai - one of the hottest property markets of recent years. In March, lenders in the city even reported negative growth in mortgage loans.
(China Daily May 14, 2008)
