Prices
Table 1 shows the consumer price index or CPI was mostly flat last year. In fact, there was a slight deflation of prices at the start of the year.
This year, prices have increased quickly. This recent change has given rise to some concerns about a return of high levels of inflation.
Let us note that, in absolute levels, the inflation rate cannot be considered high. On a quarterly basis the rate stands at about 2 or 3 percent across the last three periods. That is after a trough in the fourth quarter of last year.
The rate of inflation certainly deserves a degree of attention, as the more recent data suggests that the rate of growth is accelerating.
Looking at the major index components, the biggest contributor to the overall rise in the price index is food and beverages. This component alone has risen by more than 10 percent since the beginning of the year. This steep rise was to be expected as a result of the appreciation of the renminbi.
There is little that can be done. No one expects Macau to start producing its food and it is unlikely the government will change its import licensing policies, no matter how desirable that might be.
As long as the renminbi keeps appreciating, there will be price pressures on the food section of the consumer price index. Those pressures will be most acutely felt by lower income households.
Since the casino boom started in 2004, the essential needs of food and housing have been the two components of the price index that have registered the highest cumulative increases and had the greatest effect on the inflation rate.
Any analysis of this trend needs to be carried out prudently.
First, with the dramatic social end economic changes of the past few years, how representative of the average consumer is the basket of goods used in the CPI calculation?
Second, the mashing up of housing and fuels consumption is as questionable as ever, even leaving aside the idiosyncrasies of the real estate market.
It may be useful to publish two different sets of indices, one with housing and the other without.

Tourist spending
With so many tourists arriving in Macau, reliable information on their spending patterns is crucial to business, especially small and medium enterprises.
The data made available by the Statistics and Census Service for visitors’ expenditure is expressed per capita and obtained by surveying a sample of visitors that may be susceptible to oscillations that are difficult to explain. There are, however, some hints to these interesting trends.
The first attention-grabbing pattern is the relative stability of individual expenditure across the past six years. Together, shopping and non-shopping expenses, which do not include gaming, appear to have levelled out at about MOP1,600.
Given the period of time shown in this graph, the changes in the origins of visitors and the changes in income and exchange rates associated with mainland visitors, that “flatness” is surprising.
Moreover, the data for the second quarter of 2010 shows a sharp switch from non-shopping to shopping expenses. It is also surprising, suggesting spending substitution between the two that is implausible. Future figures are required to confirm this trend.
Table 5 displays the expenditure levels for a range of Asian visitors, including some top source countries and territories for tourists. It shows a possible decrease in the spending of mainland tourists. This is another trend worth monitoring, as they have been Macau’s most profligate tourists.
The final table provides the most surprising result of this analysis. By crudely deflating visitors’ per capita expenditure using the tourist price index, there is a pronounced decrease in their real expenditure.
If this is more than a statistical fluke, it suggests a pronounced change in spending behaviour that calls for careful analysis.
Either there are important changes taking place that are being ignored and whose consequences may not be anticipated, or the collection methods are providing us with unreliable data and should be reassessed.