Climbing prices are polarizing China's consumers. While some are trying to withstand the pressure of inflation by investing, others have no choice but to put more of their incomes towards consumption and less into savings. If inflation continues, people's standard of living will decline.
Despite the climbing prices, Xinhua Finance's consumer confidence index increased from August to September, likely due to the windfalls many are enjoying thanks to a soaring stock market.
In September, those with lower household incomes were forced to put more money into daily consumption. Meanwhile, those with higher incomes began moving their savings out of banks and into the stock market.
A Xinhua Finance survey shows that influenced by inflation, consumer confidence fell in September. The index of the higher income families only fell slightly.
In August, people's daily expenditures stood at 51 percent of their monthly income, and in September, this proportion rose by 2 percentage points to 53. If split by income brackets, this figure is even higher for low-income families, while higher-income ones saw a decline in the ratio.
The proportion of people who did not invest in the stock market increased from 5 percent to 48 percent, and 12 percent of respondents to the survey said that they put more than 50 percent of their income towards new investments. The proportion of lower income families investing more than 50 percent of their income held steady, while the same ratio for high-income families increased dramatically.
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