Prices of consumer goods in China fall for the first time in five years as Covid-19 hits buyers’ confidence

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Prices of fast-moving consumer goods eased 2.1 per cent year on year from January to September

A recovery in consumer spending in the second and third quarters was not enough to offset the sharp decline in the early months, says Kantar’s Jason Yu

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Chinese consumers opted for lower-priced goods amid fears over declining incomes and job security because of the Covid-19 pandemic. Photo: Reuters

Daniel Renin Shanghai

Published: 7:00am, 3 Dec 2020Updated: 7:00am, 3 Dec 2020

China’s buoyant consumer sector hit a blip this year, with prices of fast-moving consumer goods falling for the first time in five years, as people downgraded to low-priced daily necessities amid fears over declining incomes and job security because of the coronavirus pandemic.

Prices of FMCG, which includes packaged foods, beverages, skincare products, shampoos and over-the-counter drugs, dropped 2.1 per cent from January to September, the first time since 2015 that the sector has reported a deflation, according to a joint study by global consultancy Bain & Co and market research firm Kantar Worldpanel. The decrease in prices comes after a 3.7 per cent rise in 2019.

“A recovery in consumer spending in the second and third quarters was not enough to offset the sharp decline in the early months,” said Jason Yu, general manager of Kantar Worldpanel China. “The Covid-19 pandemic proved to be a stumbling block to the consumption upgrade in China.”

Home and personal care were the only product categories to buck the deflation trend. Sales of products used to maintain hygiene and health, such as masks, soaps and thermometers, enjoyed a 9 per cent growth year on year in the January to September period as consumers stocked up on necessities because of Covid-19 fears.

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Over the past five years, average selling prices in the FMCG segment has outstripped the country’s official consumer price index. However, China’s official consumer price index dropped sharply to an 11-year low of 0.5 per cent in October from 1.7 per cent in September, according to the latest data from the National Bureau of Statistics.

Prices of consumer goods in China fall for the first time in five years as Covid-19 hits buyers’ confidence

Prices of fast-moving consumer goods eased 2.1 per cent year on year from January to September A recovery in consumer spending in the second and third quarters was not enough to offset the sharp decline in the early months, says Kantar’s Jason Yu

Prices of fast-moving consumer goods eased 2.1 per cent year on year from January to September

A recovery in consumer spending in the second and third quarters was not enough to offset the sharp decline in the early months, says Kantar’s Jason Yu