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Chinese New Year Special Annual inflation
Many businesses increase their prices during the holidays in what has become an unwelcome New Year tradition
BY ALEXANDRA LAGES
stabilise this year. But they must wait until the end of the Chinese New Year holidays, during which increases in prices for the most sought-after goods and services have become a tradition, as businesses take advantage of the seasonal surge in demand. Economists do not expect these
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short-term price increases to diminish the value of the pataca in your pocket permanently. “During Chinese New Year, people tend to spend more on consumption goods, as well as durable goods. I guess it is because of tradition and culture. The long holidays also allow people to go shopping, dining and travelling. However, this is short-term and seasonal, and therefore will not have a long-term impact,” says the dean of the University of Macau’s Faculty of Business Administration, Jacky So Yuk Chow. Mr So expects prices to be “a little
bit up” during the holidays, but to return to normal afterwards. Prices of food and goods associated
with New Year may start to rise some days beforehand but consumers may get discounts on clothing because shops like to clear their shelves to make room for new stock, says Henry Lei Chun Kwok, assistant professor of business economics at the University of Macau. “The in ation issue in the month of Chinese New Year may not be too signi cant, taking into account the promotional activities conducted by some shops,” he says. Last year, Chinese New Year fell
on February 3. Data from the Statistics and Census Service show prices were 0.93 percent higher in January than the month before and 0.9 percent higher in February than in January. These were the two highest month-to-month increases last year. In March, prices continued to increase but at only half the rate. It was similar in 2010, when the New Year fell on February 14. Prices
JANUARY 2012
lthough in ation was last year’s hot potato for the government, of cials are expecting prices to
were 1.11 percent higher in February than the month before but 0.25 percent lower in March than in February.
Bonus bonanza The annual rate of in ation is likely to have stayed above 5 percent last year. The government is hoping that in ation will slow this month, because in ation in the mainland, Macau’s biggest supplier of goods, has been slowing since last July.
Economists agree that this may be
the case. Mr Lei says in ation in the
mainland and the appreciation of the renminbi are “ nally under control”. Mr So adds: “The in ation rate in Macau is mainly affected by the mainland and some other countries, especially food, clothing and other retail items. Since the central government is eager to keep in ation under control, and in fact it is achieving it, most likely the in ation rate in Macau in January will remain steady.” This year a new factor comes into
play. New Year is just one month after Christmas. Typically it falls about two months later. This could tempt businesses to raise prices earlier and keep them high for longer. Mr So expects timing to have little effect, remarking that Christmas is more of a Western holiday. But Mr Lei points out that civil
servants receive double pay in December and private-sector employees collect
“The infl ation issue in the month of Chinese New Year may not be too signifi cant,” says Henry Lei, assistant professor of business economics at the University of Macau
their year-end bonuses about the same time, temporarily giving them more purchasing power, which increases demand and so pushes up prices.
Hard to swallow Mr Lei says it is culture, as expressed by the popular urge to buy things to celebrate the New Year, that fuels in ation during the holidays, so there is little the government can do about it. Moreover, people expect to pay
more during big festivals and therefore do not complain too bitterly when they are asked to do so, he says. That said, Mr Lei suggests special
grants during the holidays for those with low incomes. The Consumer Council says that
what people complain about most is the higher cost of eating out, although even then, there are not that many complaints. “During Chinese New Year in 2011, there was only one case, while the number of cases in the past few years stood at around ve,” a spokesperson for the council says. The Consumer Council has
repeatedly called on all restaurants “to clearly indicate the detailed information of all charges and let consumers know about any changes in prices in advance,” the spokesperson says. “Therefore, the number of complaint cases has been gradually decreasing each year.” The council also advises diners to
check price lists and ask about other charges. “Such ‘awareness’ work has also proved effective,” the spokesperson says.
The chairman of the United
Association of Food and Beverage Merchants of Macau, Chan Chak Mo, says restaurants usually impose a 20 percent surcharge during the New Year holidays. Mr Chan, who is also a member of the Legislative Assembly, argues that the surcharge is needed to offset the cost of paying employees triple-time for working on the rst three days of the festival, as required by law.
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