Wages buoy consumer confidence

Consumers in third-tier cities reported the highest confidence index of 113 points, closely followed by fourth-tier cities at 112 points. First- and second-tier cities shared a confidence level of 110 points. Confidence in rural areas was unchanged from the previous quarter, at 110 points, according to Nielsen.

Consumers remain confident in first quarter

Consumer confidence soars in Nielsen index

"Deepening urbanization is another key driver behind China's high level of confidence. Even though more than half of China's 1.35 billion people live in towns and cities, the urbanization rate in China, compared with that of the US and the EU, is still low, meaning millions of new consumers with cash to spend will emerge in the coming decade," said Dodd.

Despite overall retail sales growth of 12.4 percent in the first half of this year, compared with the same period last year, the growth of offline fast-moving consumer goods retail sales as measured by Nielsen slowed from 7.5 percent in the first quarter to 5.4 percent in the second quarter.

"This is due in part to a growing migration of Chinese consumers from offline to online," said Dodd.

For the 11 categories audited both online and offline, online sales increased from 15.2 percent of total sales in May of last year to 19.6 percent in May this year. Offline sales still account for the majority of all sales, occupying around 80 percent.

Nielsen research also showed that online sales, with 6.8 percent, contributed more to the overall growth rate of 12.7 percent in these 11 categories, compared with only 5.9 percent from offline sales.