Inflation outpaces rise in cost of luxury
By Lu Nengneng |
July 19, 2013, Friday
|
Print Edition
Print Edition
THE cost of luxury goods and services increased at their slowest pace for seven years last month because of China's economic slowdown and the government's anti-extravagance campaign, the Hurun Research Institute said in its latest report.
China's Luxury Consumer Price Index, which has monitored price changes in 77 luxury items since 2007, rose 1.52 percent in June from a year earlier, 3.42 percentage points lower than the increase in the same period of last year. It was the first time the index had been outpaced by China's inflation rate, which rose 2.7 percent in the same period.
"Driven by consumer demand, luxury prices were increasing fiercely in the past few years, But that momentum seems to have come to a halt this year. The main reasons are China's economic slowdown and the fight against corruption," said Rupert Hoogewerf, Hurun's founder and chief researcher.
Drinks and tobacco experienced the steepest downturn in Hurun's luxury basket which also includes education, jets, yachts, cars, property, travel, watches and jewelry.
The cost of drinks and tobacco dropped 1.85 percent from a year earlier, compared to their 7.84 percent increase in the same period of last year. The price for a bottle of 30-year-old Moutai liquor, a drink favored at official banquets, dropped from its peak of 20,000 yuan (US$3,256) to 17,000 yuan since the central government targeted official receptions in its bid to cut public spending.
Last December, China's Central Military Commission issued a ban on senior military officers holding luxury banquets.
The government announced "eight rules" for official behavior, which specifically rejected extravagant lifestyles.
Reports that exposed government officials wearing pricey watches they shouldn't have been able to afford may have had an effect on luxury timepieces. The expensive watches, along with jewelry, dropped 0.85 percent last month from a year earlier.
Bolstering the latest increase in the Luxury Consumer Price Index, travel, accessories, cosmetics and automobiles all saw prices rise, the report said.
The cost of travel rose the most, jumping by 6.23 percent last month, though 5.69 percentage points lower than the growth recorded in the same period the year before.
China's Luxury Consumer Price Index, which has monitored price changes in 77 luxury items since 2007, rose 1.52 percent in June from a year earlier, 3.42 percentage points lower than the increase in the same period of last year. It was the first time the index had been outpaced by China's inflation rate, which rose 2.7 percent in the same period.
"Driven by consumer demand, luxury prices were increasing fiercely in the past few years, But that momentum seems to have come to a halt this year. The main reasons are China's economic slowdown and the fight against corruption," said Rupert Hoogewerf, Hurun's founder and chief researcher.
Drinks and tobacco experienced the steepest downturn in Hurun's luxury basket which also includes education, jets, yachts, cars, property, travel, watches and jewelry.
The cost of drinks and tobacco dropped 1.85 percent from a year earlier, compared to their 7.84 percent increase in the same period of last year. The price for a bottle of 30-year-old Moutai liquor, a drink favored at official banquets, dropped from its peak of 20,000 yuan (US$3,256) to 17,000 yuan since the central government targeted official receptions in its bid to cut public spending.
Last December, China's Central Military Commission issued a ban on senior military officers holding luxury banquets.
The government announced "eight rules" for official behavior, which specifically rejected extravagant lifestyles.
Reports that exposed government officials wearing pricey watches they shouldn't have been able to afford may have had an effect on luxury timepieces. The expensive watches, along with jewelry, dropped 0.85 percent last month from a year earlier.
Bolstering the latest increase in the Luxury Consumer Price Index, travel, accessories, cosmetics and automobiles all saw prices rise, the report said.
The cost of travel rose the most, jumping by 6.23 percent last month, though 5.69 percentage points lower than the growth recorded in the same period the year before.
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