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Rich digging deeper as luxury prices beat inflation

2014-07-23 13:53 Shanghai Daily Web Editor: Si Huan

Luxury is becoming more expensive in China as the rich are digging deeper into their pockets for specialized goods and services, says the Hurun Luxury Consumer Price Index.

Prices of luxury goods and services continued to outpace inflation this year, while high-end restaurants and banquets were the biggest losers, the annual survey by the Hurun Research Institute found.

The Hurun Luxury Consumer Price Index 2014, which recorded the year-on-year price changes of 97 luxury items last month, rose 4 percent as against a 2.3 percent consumer price index rise during the same period of last year. The respective accumulative growth over the past eight years was a stunning 70 percent and 29.2 percent respectively.

The biggest decline in luxury prices was in the restaurant sector, a victim of the central government crackdown on misuse and lavish spending of public funds by state officials.

The price for a high-end banquet in Shanghai plunged the most — by as much as 40 percent to 10,750 yuan. A bottle of Wuliangye Laojiu, and a bottle of Moutai Feitian, both premium Chinese liquors, went down 17 percent and 32.6 percent, respectively, to nearly 2,400 yuan and 1,300 yuan.

In contrast, the biggest gainers were as diverse as a Tomson golf villa in Shanghai, up 34.2 percent to about 25 million yuan; an 18-year-old Chivas whiskey gift set (29.6 percent at 800 yuan) and an Adler diamond necklace (27.7 percent at 46,000 yuan).

Rupert Hoogewerf, chief researcher at the Hurun Research Institute, said the buzzword "tuhao" — those with deep pockets but poor taste — has made China's rich aware that the most expensive thing is not necessarily the best. And that put pressure on brands targeting high net worth individuals.

The biggest winners of this year's luxury consumer price index were properties, yachts and jets, and even education.

Last year, luxury travel, accessories and skin-care products, automobiles and lifestyle were the big thing for the rich.

Luxury life begins with buying a house, the institute said. The overall price increase of 12.6 percent this year came along with the popularity of villas due to the rich's increasing love for golf. The membership fee for the Shanghai Sheshan Golf Club, for example, rose from 2.3 million yuan last year to 2.7 million yuan this year, up 17 percent.

Prices for yachts and jets was up by 6.5 percent, up for the second straight year, while education rose 5.6 percent, 3.1 percentage points higher than last year.

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