According to Oliver Wyman, 83% of more than 900 Chinese respondents felt the impact of inflation in July, up from 69% in November 2021.
Despite a much smaller increase in the Chinese consumer price index compared to the US.
If the growth background is worse, a smaller increase in prices would be required to create worries among households,” said Ben Simpfendorfer, a Hong Kong-based partner at Oliver Wyman.
BEIJING — Chinese consumers say they’re feeling the pressure of rising prices, despite government figures showing inflation running at a much slower rate than in the United States and other countries.
This is according to surveys issued this month by consulting company Oliver Wyman.
According to the report, 83% of more than 900 respondents felt the impact of inflation in July, up from 69% in November 2021.
China’s consumer price index reached a two-year high in July, up 2.7% year on year, owing mostly to a comeback in pork prices. In August, the index moderated to a 2.5% year-on-year increase.
This is far lower than the United States, which reported an 8.3% year-on-year increase in consumer prices in August. Rising food and housing expenses offset a drop in petrol prices.
In instance, an Oliver Wyman survey of over 1,200 Americans conducted in July indicated that 92% felt the impact of inflation on daily living, up from 79% in November.
Inflation still has a higher impact in the United States than in China, despite the fact that the proportion of impacted respondents in China increased by one percentage point more than in the United States.
It’s important to note that the surveys assess attitude rather than the consumer price index, according to Ben Simpfendorfer, a Hong Kong-based partner at Oliver Wyman. He stressed that Chinese responses were likely affected not only by actual price rises, but also by the overall slower economic environment.
If the growth background is worse, a smaller increase in prices would be required to generate concerns among people,” he said.
More than half of Chinese respondents claimed that because of the prospect of a recession, they have spent less money on food and entertainment, and have shifted to cheaper products and services where possible.
Concerns about jobs and rent
Concerns about a global economic recession have grown. Although the International Monetary Fund still forecasts China to be one of the world’s fastest-growing global economies this year, the country’s GDP is expected to fall considerably from last year.
According to the Oliver Wyman study, nearly one-third of respondents in China were concerned about their job security owing to inflation, compared to 13% in the United States. According to the firm, the study focused mostly on those residing in China’s major cities.
Around 20% of survey respondents were concerned about the impact of inflation on their capacity to pay rent or mortgage, while 40% were concerned about their ability to pay for groceries and necessities.
Around 20% of survey respondents were concerned about the impact of inflation on their capacity to pay rent or mortgage, while 40% were concerned about their ability to pay for groceries and necessities.
According to a July official survey, unemployment among China’s young people aged 16 to 24 has risen to about 20%, while that of working adults in cities is around 5.4%.
Postponing some purchases
According to the Oliver Wyman poll, Chinese consumers believed that gas costs had increased the most in the year through July, followed by appliances and house renovations.
According to the report, when asked what purchase they could put off due to inflationary pressures, respondents answered autos the most, followed by leisure travel.
Potential buying delays exacerbate China’s ongoing consumer demand slump.
In a September 9 study, Macquarie’s chief China economist Larry Hu stated that China’s “zero-Covid policy is a huge deflationary force that stimulates production but saps demand.” He described property problems as “another key deflationary driver.
Hu emphasised that, excluding food and energy, China’s consumer price index climbed by 0.8% in August. “The message to China’s policymakers is clear: deflation, not inflation, is the main risk China faces at this stage.”
Chinese respondents to Oliver Wyman’s survey were fairly enthusiastic about the economy’s prospects.
More over half of respondents expected the Chinese government to resolve inflation in the future months, while 23% did not.
In contrast, nearly half of US respondents indicated they didn’t think the government could tackle inflation in the next six to eight months, according to the research.
