A CHINESE consumer confidence index fell for the first time in six quarters on expectations that the price of goods and services will keep increasing.
The measure dropped to 104 in the third quarter from 109 in the previous three months, according to a statement from Nielsen Co. and the Chinese statistics bureau s Economic Monitoring and Analysis Center.
The rebound in inflation expectations among consumers has curbed their willingness to spend, according to the statement, released ahead of a briefing in Beijing yesterday. Concern about sustained price increases is being triggered mainly by higher food costs, the survey of 3,500 people across the country showed.
Premier Wen Jiabao told State television Tuesday the Cabinet was drafting measures to counter overly rapid gains in prices, after inflation rose to 4.4 percent last month, the highest in more than two years. The National Development and Reform Commission could impose price caps on food and offer subsidies, China Securities Journal reported Tuesday, quoting unidentified sources.
Price controls don t really work, so rather than introducing them, the government needs to increase supply and open up imports for agricultural produce to stabilize prices, said Liu Ligang, head of China research at Australia & New Zealand Banking Group Ltd. in Hong Kong. The lesson of the surge in prices in 2008 is that the government should be more pre-emptive.
Rural consumer confidence fell to 106 from 117 the previous quarter, the NBS-Nielsen survey said. Urban consumer confidence in first-tier cities including Beijing and Shanghai was unchanged, rose in second and third-tier cities and fell in fourth-tier cities, according to the statement.
After several quarters of increasing consumer confidence, it is reasonable that rural consumer confidence should fluctuate, Mitch Barns, Nielsen s Greater China president, said in the Chinese-language statement. He cited frequent natural disasters and the increase in consumer prices as the main reasons for the decline.
A total of 76 percent of consumers expect prices will increase further over the next year, up from 70 percent the previous quarter, according to the survey. Concerns about inflation were strongest among rural and first-tier city consumers, it said.
In rural areas, 89 percent of consumers expect the increase in prices to persist over the next 12 months, compared with 78 percent in the previous survey released in August.
Food prices jumped 10.1 percent in October from a year earlier, the most in two years, the National Bureau of Statistics said last week. Vegetable prices rose 18 percent from a year earlier.
The rising cost of food is being driven by a variety of factors including demand, higher logistics costs, natural disasters and increased prices of goods such as grain and cooking oil on international markets, Yao Jian, spokesman for the Ministry of Commerce, said at a briefing Tuesday.
(SD-Agencies)
