Biggest drop in consumer prices |
http://www.sina.com.cn 2003/07/23 11:46 Shanghai Daily |
Hong Kong's consumer prices, which have been declining for almost five years, fell in June at their fastest pace in seven months as companies cut prices of everything from clothing to travel to get consumers spending again following the city's SARS outbreak. The consumer price index dropped 3.1 percent from a year earlier after sliding 2.5 percent in May, the government said in a statement. The drop was bigger than the median 2.6 percent fall forecast in a Bloomberg News survey of eight economists. The city's severe acute respiratory syndrome outbreak caused consumer spending and tourism to tumble in April and May. As companies stepped up firing to reduce costs, the jobless rate climbed to a record 8.6 percent last month, sapping consumer confidence and making people reluctant to spend. "Retailers, shopkeepers haven't really rediscovered their pricing power," said Mike Moran, an economist with Standard Chartered Bank. Deflation "will carry on for the rest of the year and could still be in place for the majority of next year," Moran said. At Pricerite Stores Ltd's shops, house-hold products such as bleach cost half their original prices, while watch retailer City Chain is offering discounts of as much as 30 percent. SmarTone Telecommunications Holdings Ltd, the city's No 3 mobile-phone company, has raised the call time available under its monthly plans, effectively cutting rates by as much as 31 percent. Giordano International Ltd, which owns one of Asia's biggest casual-wear chains, trimmed prices by as much as two-fifths. Rivals Bossini International Holdings Ltd and Esprit Holdings Ltd are offering discounts of as much as 80 percent. "In the past, customers would be happy if retailers offered 20 percent off," said Alison Law, a spokeswoman for Giordano. "These days, anything less than 50 percent, they won't see as a discount." |
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