People visit a chain store of the Hong Kong-based snack retail chain Best Mart 360° at Tseung Kwan O in Hong Kong, south China, on Dec 28, 2020. Hong Kong’s January, 2023 retail sales rose 7 percent year-on-year, the second month in a row of growth. (PHOTO / XINHUA)

Hong Kong’s January retail sales rose 7 percent year-on-year, the second month in a row of growth, as the city’s consumption market further shakes off the lingering effects of the pandemic.

Provisional figures released by the Census and Statistics Department on Thursday showed total retail sales amounted to HK$36.2 billion ($4.61 billion) in January.

Retail sales volume increased 5.1 percent year-on-year in January. That compared with a revised 0.6 percent decrease in December

Retail sales volume increased 5.1 percent year-on-year in January. That compared with a revised 0.6 percent decrease in December.

A government spokesman attributed the rise in retail sales to the uptick in consumer sentiment and the early arrival of the Lunar New Year.

Many types of retail-outlet businesses saw improvements, with some recording double-digit increases. The most notable rise was seen in sales of Chinese drugs and herbs, which rose 38.5 percent year-on-year in value.

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However, the Census and Statistics Department said that retail sales tend to show greater volatility in the first two months of a year because the dates of the Lunar New Year differ from year to year.

Local consumer spending normally attains a seasonal high before the festival. As the Lunar New Year fell on Jan 22 this year but on Feb 1 in 2022, the year-on-year comparison of the figures for January 2023 with those for January 2022 might have been affected by this factor to a certain extent, the department said.

Looking ahead, the continued return of economic activity to normalcy and a further rebound in the number of visitor arrivals will benefit the retail sector, the spokesman said, adding that the improved labor market conditions will also provide a boost.

Annie Tse Yau On-yee, chairwoman of the Hong Kong Retail Management Association, said the city’s consumption market has recorded a turnaround following the lifting of the travel restrictions, driven by improvements in tourism-led sectors.

READ MORE: Hong Kong's December retail sales up 6.2%

It is expected that retail sales will post strong gains in the first quarter as the fifth wave of the COVID-19 pandemic dealt a blow to retail sales in February and March 2022, she said.

Nevertheless, Tse said, it may still take time for retail sales to recover to pre-pandemic level. According to the association’s survey, 90 percent of questioned members said it will take nine months or longer for sales to return to 2018 levels, with more than half saying it will take more than a year to get business back to normal.

Tse also called on the government to take more measures to tackle the labor shortage as 9 of 10 respondents said they are shorthanded.