Chinese consumer confidence falls again

2007-12-26 22:50:20 Shanghai Daily

CHINESE consumer confidence declined again in December to a new low after a sharp fall in November, with sentiment hammered by rising prices and weaker investment returns, said a report by Xinhua Finance Ltd and eziData yesterday.

The China Consumer Confidence Index, compiled by the two companies, fell 1.7 points in December to 97.2, the lowest level in the short history of the survey, which started in April when the benchmark value was set at 100.

Among major cities, Shanghai experienced the biggest decline. Shanghai's consumer confidence index tumbled seven points to 92, compared with a 2.2-point fall in Beijing to 97.2 and Guangzhou's 3.7-point drop to 93.2.

The survey was conducted through 1,547 telephone interviews from December 2 to December 15 by Xinhua Finance Ltd, a financial information and media service provider and eziData, a local China consumer data provider.

In November, the index dropped by a record 1.9 points on the back of soaring consumer prices and a correction in the domestic stock market.

"The consecutive drops (in consumer confidence) are mainly due to steadily rising prices as well as losses caused by the stock market's decline" and "expectations of more government policies to curb an overheated economy," said the report.

The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, fell below 5,000 points in November from almost 6,000 points at the start of last month. The index has been hovering around 5,000 points in December.

"The stock market's fall in November saw consumers turning cautious about their investment decisions. That said, the withdrawal of money from savings accounts, which had stopped last month, restarted in December as rising prices saw higher household spending," said the report.

China's consumer prices grew to an 11-year high of 6.9 percent in November, which meant people had to allocate more money for their family spending and less for investment.