Nielsen survey: Highest levels in more than two years despite inflation worries

Confidence among Hong Kong consumers rose to its highest level in two and a half years despite heightened concern over accelerating inflation.

The latest Global Confidence Survey released Friday by Nielsen showed that the overall index for Hong Kong consumer confidence in the first quarter of 2011 reached 107, well up on the 99 it stood at during the fourth quarter last year.

Improving job prospects and a better state of personal finance have helped to shore up sentiment, according to the survey, which polled 28,000 Internet consumers in 51 countries from March 23 to April 12.

The percent of Hong Kong respondents who believed the city's job market would continue to improve in the next 12 months rose to 66 percent from 55 percent in the previous quarter. And the share who expected their personal finances to be in better shape in the coming 12 months expanded to 67 percent from 62 percent last time around.

"With unemployment decreasing to 3.4 percent in quarter one and GDP continuing to gain momentum reaching 7.2 percent in the first quarter, consumer confidence in Hong Kong continues to build momentum especially when it comes to consumers' outlook for job prospects, which served as the key driver of the boost in consumer confidence," Oliver Rust, managing director of the Nielsen Company Hong Kong, said in a media briefing Friday.

In the latest survey, 47 percent of the respondents expressed their intentions to spend in the year to come, compared with 44 percent in the fourth quarter last year.

But Rust sees "some sort of leveling in consumer confidence later this year", which is expected to take a beating from growing concerns over inflation.

For the first time, the problem of increasing food prices has been on people's mind the most, voted by 40 percent of respondents as their top concern, up from 26 percent in the fourth quarter last year.

"This is the first time ever that the Nielsen survey has shown concern for food inflation has surpassed concern for the economy," said Rust.

Hong Kong's overall consumer prices leapt 4.6 percent in March from a year ago, the highest level since August 2008. A strong uptick has been seen in food prices, which recorded a staggering 6.3 percent year-on-year rise in the first quarter.

"As an everyday necessity, consumers in Hong Kong are already reducing their expenditure on fresh food by 5 percent to cope with rising food prices," Rust noted.

Additionally, 52 percent of respondents reported having delayed upgrading their digital gadgets such as a personal computers or mobile phones, while 34 percent said that they have cut back on dining out to save on household expenses.

"While Hong Kong consumer confidence for 2011 continues its positive trend, we should remain cautiously optimistic about the economy given the continued pressures of inflation and raw materials. These factors will continue to impact on consumers spending habits significantly," Rust said.

China Daily

(HK Edition 05/21/2011 page2)