(Yicai) June 16 -- China’s total retail sales of consumer goods fell 0.6 percent in May from a year earlier to CNY4.109 trillion (USD608 billion), marking the first year-on-year decline since December 2022, as a high comparison base and unfavorable weather weighed on spending.

The decline does not signal a broader deterioration in consumption, according to the National Bureau of Statistics, which said the consumer market has remained generally stable this year while the consumption structure continues to improve. Officials highlighted the growing role of services consumption in supporting overall demand.

The drop was mainly attributable to a high base of comparison from May last year, when China’s trade-in subsidy program for consumer goods was rolled out on a large scale and pulled forward consumer demand, NBS spokesperson Fu Linghui said at a press conference today. High temperatures and heavy rainfall in some regions also temporarily affected offline consumption, he added.

The continued shift toward services and emerging forms of consumption is expected to support consumer spending going forward, although some economists say stronger income growth will be needed to sustain the recovery.

From January to May, total retail sales of consumer goods rose 1.4 percent from a year earlier. Total retail sales of goods and services increased 2.8 percent, with retail sales of services climbing 5.4 percent, retail sales of goods rising 1.2 percent, and catering revenue advancing 3.1 percent, according to NBS data.

Under the NBS statistical framework, total retail sales of consumer goods comprise retail sales of goods and catering revenue.

Service Consumption Gains Momentum

A key feature of China’s improving consumption structure is the accelerating release of demand for services, which is becoming an increasingly important driver of consumption growth, Fu said. He added that retail sales of services are emerging as an important indicator for assessing consumption trends.

This change is determined by the laws of economic development and is also an important manifestation of China’s consumption upgrade, Fu said. He noted that in developed economies, consumer demand also gradually shifted from goods consumption to services consumption as incomes rose.

Another sign of the improving consumption structure is the release of demand for new forms of consumption, Fu said. Online consumption, digital consumption, and green consumption have become new growth drivers, while goods consumption continues to upgrade and consumption potential in rural markets is being further unlocked.

Calls for Measures to Boost Household Income

Xing Yuguan, an associate researcher at the Big Data Development Department of the State Information Center under the National Development and Reform Commission, said demand for services consumption is being released rapidly and has become an increasingly important force supporting China’s consumption growth. Retail sales of services rose 5.4 percent in the first five months of the year, consistently outpacing the growth rate of retail sales of goods, he noted.

Huang Qunhui, a researcher at the Institute of Economics at the Chinese Academy of Social Sciences, suggested that the government introduce an income growth plan for urban and rural residents as soon as possible to improve expectations for future earnings and provide a more effective boost to consumption.

Editors: Tang Shihua, Emmi Laine