China Q3 consumer confidence index down on mounting inflation concerns

16:47, November 17, 2010      

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Chinese consumers' confidence fell in the third quarter as the pace of inflation quickened.

The Consumer Confidence Index, the main gauge of Chinese consumers' confidence in the economy, posted its first drop in six quarters as inflation accelerated 3.6 percent year on year in September.

The index fell 5 points on a quarterly basis to 104, the China Economic Monitoring & Analysis Center affiliated with the National Bureau of Statistics (NBS) said Wednesday.

"The index fell because consumers are less willing to buy," the NBS said in a report.

Surging food prices pushed China's consumer price index (CPI), a key measure of inflation, 4.4 percent higher on a year-on-year basis in October.

Chinese Premier Wen Jiabao recently said the State Council, China's cabinet, is drafting measures to suppress sharp rises in commodity prices that affect people's everyday life.

The confidence index for urban consumers was stable on a quarter-on-quarter basis at 101 while that for rural residents, who are less well-off and are more sensitive to price rises, fell 11 points to 106 after five consecutive quarterly gains.

Mitch Barns, president of Nielsen's Greater China, the co-compiler of the data, said rural consumer's fall in confidence was understandable given its previous rises.

He attributed the decrease to several natural disasters and hikes in the prices of consumer goods.

According to the report, 78 percent of the consumers surveyed expect prices to increase further over the next 12 months, up 10 percentage points from the second quarter.

Some 62 percent of consumers surveyed believe housing prices will continue to rise over the next 12 months.

"Price hike expectations have dampened consumers' willingness to consume. Only 41 percent of the survey respondents think it is the right time to buy now, a fall of 11 percentage points from the second quarter," the report said.

Despite the weakened confidence, the report said Chinese consumers remain "optimistic" about the outlook for the economy.

Nearly 70 percent of the respondents expect their employment situation to improve in 2011.



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