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China Becomes World’s Biggest Grocery Market
03 Apr 2012 EDT - CNBC.com
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The forecasts take into account a “significant slowing” of China’s rapid economic growth. Worries about worse-than-expected growth in China’s gross domestic product , which the Chinese government predicts will expand by 7.5 percent in 2012, down from 9.2 percent last year, have come onto the markets’ agenda again.

Wages should continue to grow faster than inflation, as the Chinese government has tried to dampen inflation at the expense of slowing growth.

“Despite the slowdown, measures to stimulate Chinese domestic consumption present an opportunity for retailers. For example, higher wages could boost disposable income and increase the number of potential customers,” Cécile Riverain, IGD’s international research manager, told CNBC.com .

Consumer goods giants like Unilever and Procter & Gamble have been able to push through double-digit price rises and still maintain volume growth in China, while price increases have hit their volume growth in Western markets, according to Rahul Sharma, retail analyst at Neev Capital.

“There’s actually much more pricing power in Asia than in the West,” he told CNBC.com. “Consumers are maturing and buying more brands, but it’s not the usual suspects that are doing well.”

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