Chinese retail sales rose 12.7 percent on the year in May, slowing from an increase of 18.4 percent in April and falling short of the consensus forecast of 13.8 percent. This reduction in year-over-year growth partly reflects a smaller base effect from the impact of strict lockdowns in Beijing and Shanghai last year. Retail sales fell very sharply on the month in April 2022 but to a lesser extent in May 2022, impacting year-over-year growth rates for April and May 2023.

Retail sales rose 12.7 percent on the year in urban areas, down from 18.6 percent previously, and rose 12.8 percent in rural areas after a previous increase of 17.3 percent. In month-over-month terms, retail sales increased 0.42 percent in May after advancing 0.49 percent in April.

Today's data fell short of expectations, resulting in a fall in the China ECDI from 7 to minus 50 and the ECDI-P from 20 to minus 60, indicating that data are underperforming market expectations.

After rising 18.4 percent in April, year-over-year sales in May are expected to rise 13.8 percent.

Retail Sales measure goods that are sold to the consumer or end-user, generally in small quantities and in the state in which they were purchased by the retailer. China's retail sales are reported monthly. The critical value is the change from the same month in the previous year.

Retail sales tend to have a muted impact because the Chinese economy is not heavily reliant on consumer spending. However, the government is trying to stimulate consumer spending to give the economy more balance. To this end, the government put into place a basket of stimulus measures, including government subsidies and tax breaks for home appliances and cars, to expand consumption to sustain the economic growth, which was slowed by a slump in exports amid the global economic downturn.