The decline in Hong Kong's consumer prices slowed for a second month in September as a tourism boom made retailers less inclined to discount.

The consumer price index fell 3.2 percent from a year earlier after sliding 3.8 percent in August, the government said in a statement. That's the 59th straight drop and was less than the median 3.3 percent decline forecast in a Bloomberg News survey of 11 economists.

Tourist arrivals -- more than half of whom come from the Chinese mainland -- rose 8 percent to more than 1.47 million in September, a record for the month, the government reported. Chinese visitors on average spend more than their counterparts from the United States or Japan and are coming to Hong Kong in greater numbers since travel restrictions eased in the third quarter.

"I don't see the need to offer mass discounts as business returned to normal after SARS," said Vincent Chow, general manager of Chow Sang Sang International Holdings Ltd, which has 40 jewelry shops in the city. "Consumer sentiment has improved. Higher-priced jewelry items, those costing HK$20,000 (US$2,580) or more, are selling faster than before."

As stores, hotels and restaurants scrap discounts and take on workers to cope with the surge in Chinese visitors, Hong Kong consumers will have less incentive to defer purchases and may become more confident about spending. A pickup in consumer spending would help spur growth in an economy where retail sales dropped to a decade-low last year.

Retail sales increased in August for the first time since January and the jobless rate last month fell to a four-month low.

(eastday.com October 24, 2003)