Chinese consumers remain cautious on spending as the government’s recent stimulus measures haven’t yet yielded a substantive boost to their shaken confidence, Boston Consulting Group said.

A recovery in confidence will be significantly influenced by economic and geopolitical concerns, the consultancy said in the report on a study launched by BCG in mid-October, covering multiple-tier cities and spanning more than 30 consumption categories.

“Consumer confidence remains neutral to slightly negative,” BCG wrote, adding that the stimulus package still hasn’t meaningfully improved consumers’ income.

China’s late-September measures initially brought encouraging signs for consumption, with China’s retail sales expanding at their fastest pace in eight months in October. Fresh produce and education are spending categories that have seen noticeable growth this year, according to the report. But it will likely take more time — and possibly further stimulus measures — to fully turn around confidence rattled by China’s anaemic economic recovery and shaky property market.

Consumers who once splashed out on luxury bags and trips are also now padding their savings as a way to cope with future uncertainties, the report said, a trend that could potentially stand in the way of a long-lasting recovery for consumption. There’s been a 27% drop in the share of people seeing a rise in income growth, negatively impacting consumers’ income expectations over the next six months, BCG said.

Retailers have been counting on the stimulus to help motivate increasingly frugal shoppers to return to their previously lavish spending habits. China’s government unleashed a number of stimulus policies, including interest rate cuts and support for property and equity markets, in a bold effort to turn around the slowing economy. The measures came on top of other moves enacted earlier in the year, like subsidy programs for home appliances and car purchases.

Electronics, home appliances and the automobile sector saw positive consumption willingness due to stimulus measures, according to the BCG report. In keeping with consumers’ shift toward holding back on discretionary spending, skincare and cosmetics could see a continued consumption downgrade in the next six months, it said.

“Fundamental stimulus is key to elevating consumer sentiment, and this significant support will be instrumental in upgrading consumption and driving high-quality development,” Jean-Paul Agon, chairman of L’Oreal SA, said at the China International Import Expo in Shanghai earlier this month.

  - Bloomberg