China's retail sales increased by 5.1% year-on-year in April 2025, slowing from March's 5.9% gain—which had marked the strongest growth in over a year—and coming in below market expectations of a 5.5% rise.
China retail sales growth below forecasts
The moderation in growth reflected ongoing weakness in domestic consumption, with households remaining cautious amid an uncertain economic environment, sluggish income gains, and renewed concerns over the impact of rising U.S. tariffs as trade negotiations remain fragile.
April’s data showed broad-based softness across several key categories. Sales growth notably eased for tobacco and alcohol (4.0% vs 8.5% in March), beverages (2.9% vs 4.4%), clothing and shoes (2.2% vs 3.6%), and sports and entertainment goods (23.3% vs 26.3%). Even typically resilient sectors such as personal care (7.6% vs 8.8%) and automobiles (0.7% vs 5.5%) lost momentum, with the auto sector particularly impacted by tariff-related uncertainty and tighter household budgets. Additionally, sales of petroleum products slumped further (-5.7% vs -1.9%), reflecting both weaker travel activity and lower fuel demand.
However, pockets of strength remained. Sales picked up for essentials and durable goods, suggesting selective household spending. Grain, oil, and food sales grew at a robust pace (14.0% vs 13.8%), while household appliance sales surged by 38.8%, up from 35.1%, as consumers continued to invest in home upgrades. Jewelry sales also jumped (25.3% vs 10.6%), possibly reflecting seasonal or festival-related purchases, while office supplies (33.5% vs 21.5%) and building materials (9.7% vs -0.1%) rebounded sharply, potentially indicating an uptick in small business activity or property renovations. Medicine sales (2.6% vs 1.4%) also rose amid increased health awareness.
First four months data
Cumulatively, for the first four months of 2025, retail turnover expanded by 4.7% year-on-year, pointing to a modest recovery trajectory in consumption, though still below pre-pandemic norms. Analysts note that for China’s domestic demand to fully rebound, broader macroeconomic support may be needed—especially in the form of targeted stimulus measures, income-boosting reforms, and greater policy clarity.
Looking ahead, consumer sentiment may hinge on the outcome of ongoing trade negotiations with the U.S., labor market trends, and policy actions from Beijing, including interest rate adjustments and fiscal support aimed at bolstering disposable incomes. Without a more substantial boost to household confidence, retail sales growth could remain uneven in the coming quarters.
