Sales across all retail categories declined 10.1% in value to HK$ 40.7 billion during February 2019, the first time in 24 months that total retail sales have registered a year-on-year decline, according to data released by the Census and Statistics Department of the HK government.

The drop in sales was also the largest fall in value terms in a single month since August 2016, when sales fell 10.5% year on year by value. In volume terms too, the drop during the month of February was a significant 10.4%.

Sales of jewellery, watches, clocks and valuable gifts decreased 9.7% in February, data showed, after a revised 4.1% increase in January. Taking the first two months of the year together, the sales decline was 2.8%.

The decline in sales was attributed partly to the change in the dates of the Lunar New Year, but weak consumer sentiment also played an important role, analysts said. For the first two months of the year taken together sales were also down, but by a much smaller margin of 1.6% in value terms and 1.8% in volume terms, the department reported.

The report issued by the government points out that “retail sales tend to show greater volatility in the first two months of a year due to the timing of the Lunar New Year.  Consumer spending in the local market normally attains a seasonal high before the festival.  As the Lunar New Year fell on February 5 this year but on February 16 last year, it is more appropriate to analyse the retail sales figures for January and February taken together in making year-on-year comparison.”

According to reports, the ongoing trade war between US and China has seen consumers turn increasingly cautious, even as a drop in the value of the Chinese yuan has made shopping in HK more expensive than before.

This was reflected in the fact that sales were subdued despite the Hong Kong Tourism Board indicating a 5.8% y-o-y increase in the number of tourist arrivals during the month to 5.59 million, with a 3.7% increase in the number of visitors from Mainland China, who accounted for 81.6% of total tourists.

The Hong Kong Retail Management Association (HKRMA) said that its members expect that sales values in March and for the first quarter would have registered zero growth or even a mild drop. The computation of final sales figures is awaited.