Finding ways to fight inflation

BEIJING - No one needs to tell the average Chinese person that prices are increasing everywhere.

The majority of Chinese consumers are feeling the pinch of surging prices of food, commodities, housing and energy.

In order to battle the effects of inflation on their purses and wallets, some people are changing the way they spend, analysts have said.

The consumer price index (CPI), the main gauge of inflation, rose 6.4 percent in June from a year earlier, hitting the highest level in three years, according to figures released by the National Bureau of Statistics (NBS) on July 9.

Food prices, which account for nearly one-third of the basket of goods in the CPI calculation, climbed 14.4 percent in June from the same month last year. The price of pork, in particular, soared more than 57 percent year-on-year, the NBS said.

"Surging consumer prices have very little influence on the country's high-income groups. However, they seem to be having a major effect on ordinary families' consumption behavior," said Liang Da, an economist with the NBS.

To begin with, most average Chinese people have made more effort shopping around for the cheapest prices. They also have cut back on their entertainment and recreation spending and deferred some purchases they intended to make previously, said Liang.

Qin Zhengjia, a 27-year-old white-collar worker in Beijing, used to eat out with her friends every weekend at fancy restaurants and go shopping every two weeks but recently she changed her routine.

"I always keep track of my spending every month and I sadly find everything is more expensive than before. I paid nearly 35 percent more on food and clothing compared with last year," said Qin.

"I will definitely reduce the frequency of eating out and shopping because, to be honest, I can't afford the ever-higher costs anymore," she said.

Also, inflation leads to "polarization" among Chinese consumers, encouraging more trading up and down, according to Vincent Lui, Hong Kong-based partner and managing director of Boston Consulting Group.

Consumers will start to question the value of paying a premium for brands "in the middle" - secondary brands rather than global or national leaders in categories from clothes to groceries, he said.

"They tend to consume less or save up for top brands, and they will also look hard at cheaper alternatives - discount brands or private labels of retailers - to fulfill basic needs," said Lui.