China Textile International Capacity Cooperation Enterprise Alliance: Analysis Of Major Asian Clothing Markets In Recent Two Months

The latest official data shows that inflation in many Asian countries continued to decline from March to April this year, and clothing retail sales in China, Japan, Singapore and other major Asian markets achieved growth. However, due to frequent interest rate hikes recently by the Federal Reserve and the European Central Bank, the cost of public credit has risen, real income has declined, and purchasing power has been limited. Clothing consumption in major economies in Europe and the United States has been flat, and has not yet shown a significant recovery.

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In April 2023, the US consumer price index (CPI) increased by 4.9% year on year, falling to the lowest level in two years. Excluding the volatile food and energy prices, the core CPI of the United States in April increased by 5.5% year on year and 0.4% month on month, indicating that inflation in the United States is still at a high level and the pressure of rising prices continues. In the same month, the total retail sales in the United States increased by 1.6% year-on-year to 686.05 billion US dollars, the smallest increase since May 2020. In the same month, the retail sales of clothing (including shoes) in the United States reached US $25.5 billion, down 0.3% month on month and 2.3% year on year, showing negative growth for three consecutive months.

In March 2023, Canada's inflation rate dropped significantly to 4.3%, the lowest level since August 2021. In the same month, the total retail sales in Canada increased by 2.4% year on year; The retail sales of clothing products were $2.84 billion (about $2.09 billion), down 1% month on month and up 7.5% year on year.

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According to the data released by Eurostat, the harmonized CPI of the euro area in April rose by 7% year on year driven by alcohol and tobacco prices. In March this year, the overall retail sales of the 27 EU countries decreased by 4.1% year on year, and the retail sales of the 19 euro area countries decreased by 3.8% year on year, which was larger than that of February.

At present, the global energy price has dropped from a high level, and the pressure on energy supply faced by Europe has significantly eased, helping the EU GDP to grow by 0.3% in the first quarter of 2023. According to the Spring 2023 Economic Outlook Report released by the European Commission in mid May, the EU's economy is expected to continue to grow in the second quarter, and this year's economic growth is expected to be raised to 1.0%. However, as wage growth in Europe lags behind inflation, consumer spending may continue to be sluggish.

In March this year, the retail sales of German clothing increased by 3.7% year on year; Dutch clothing retail sales decreased by 2.9% year on year; The retail sales of French textile clothing and leather products reached 4.04 billion euros (about 4.33 billion dollars), down 2.3% year on year.

In April, the sales of textiles, clothing and footwear products in the UK reached 4.33 billion pounds (about 5.35 billion dollars), up 9.5% year on year and down 20% month on month.

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From March to April 2023, inflation rates in many Asian countries will continue to fall. The team of Chetan Ahya, chief economist of Morgan Stanley Asia, predicted in a report released at the end of April that inflation in most economies in Asia is expected to fall back to the comfort zone of the central bank in the third quarter of this year.

In March this year, Japan's core CPI increased by 3.1% year on year, the same as that in February. In that month, Japan's overall retail sales grew 7.2% year on year; The sales of textile, clothing and apparel reached 741 billion yen (about 5.27 billion dollars), a 30.9% month on month surge, up 1.9% year on year. In March, Japan's clothing imports grew by more than 20% year on year, and the rise in consumer demand may be an important reason for the significant growth of Japan's clothing retail in that month.

Turkey's inflation rate fell to 50.5% in March, still high. In Turkey, the retail sales of textiles, clothing and shoes increased by 12% year on year and 3.1% month on month.

In March, Singapore's inflation rate fell to 5.5%, the lowest level in the past 11 months. In the same month, Singapore's retail sales of clothing and footwear increased 26.5% year on year and 9.6% month on month.

In April this year, China's CPI rose 0.1% year on year, 0.6 percentage points lower than that of last month. In the same month, the sales of clothing, shoes, hats, needles and textiles above the designated size reached 105.1 billion yuan, up 32.4% year on year. With the overall domestic consumption continuing to improve, clothing and other optional consumption rebounded against the background of a low base. The growth rate continued to expand in April, with a strong recovery momentum.

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In the first quarter of 2023, Australia's CPI rose by 7% year on year, significantly falling from the peak of 7.8% in the fourth quarter of last year. In March, high food prices pushed Australia's total retail sales up 0.4% month on month, but consumption in all other categories declined. In that month, the retail sales of clothing, footwear and personal products in Australia reached A $2.94 billion (about US $1.92 billion), up 3.6% year on year and down 1% month on month. Due to rising interest rates and increasing cost of living pressure, non food retail expenditures such as clothing and household goods show signs of slowing down.

In the first quarter of 2023, the inflation rate of New Zealand slowed to 6.7% from 7.2% in the previous quarter. From January to March, the retail sales of clothing, footwear and accessories in New Zealand reached NZ $1.22 billion (about US $740 million), up 13.4% year on year.

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　　 South America – Brazil

Brazil's inflation rate reached 4.65% in March, the lowest since January 2021. In the same month, the retail sales of fabrics, clothing and shoes in Brazil fell 4.5% month on month and 7.3% year on year. At present, the Central Bank of Brazil has further curbed inflation and kept the benchmark interest rate at a high point of 13.75%. The rise in credit costs may have a negative impact on production and consumption, which will affect domestic economic growth.

　　 Africa – South Africa

In March this year, South Africa's inflation rate continued to climb to 7.1%. In that month, the retail sales of textiles, clothing, footwear and leather products in South Africa were R15 billion (about US $760 million), up 6.3% year on year.

(Source: China Textile International Capacity Cooperation Enterprise Alliance)