Luxury property, health and education drive Luxury CPI, up more than 5%, fastest Rise in 5 years, luxury wines & spirits and luxury cars see prices drop and luxury CPI is much higher than CPI at 1.9%, and double the CPI over the past decade.

Hurun Research Institute release the Luxury Consumer Price Index 2016. This is the tenth consecutive year Hurun Research Institute released the LCPI. The Luxury CPI is an alternative index, measuring the change over one year in the prices paid by luxury consumers for a basket of 124 luxury goods and services, up by 18 and separated under 11 broader categories including properties, health, education, travel, weddings, watches and jewelry, accessories and skincare, jets and yachts, leisure, high-end alcohol and tobacco, automobiles, comparing their market price this June to their market price last June.

• Luxury property market has recovered significantly. Shenzhen has seen the sharpest increase in the price, by 57%. Overseas property also has a great boost: on top of that lies Vancouver, Canada, by 28%. U.S. is also in an uptrend: San Francisco with 17.9% beat Los Angeles and Boston.
• Top school tuition increased for tenth consecutive year, up 6.2%. The leading one is the EMBA program by Hu Pan University founded by Jack Ma. Its tuition for this year is US$55k, up 28.6% from US$ 43k last year. However, the tuition fees of other Chinese EMBA programs remain stable. The tuition fees of top schools in both US and UK are now US$52k per year, up 9.6% in the US and 2% in the UK. Shanghai YK Pao School and Beijing Harrow School tuition fees rose 4% to hit US$ 25k and US$ 40k, respectively.
• Since the creation of Health as its own category three years ago, the prices of luxury healthcare has increased for three consecutive year with an increasing health awareness of high-net worth individuals. This year saw a 11.7% rise, led by a health check-up up 34%.
• This year, luxury travel market has recovered the uptrend compared with the last two years, rose 5%. As of 10 June 2016, in the foreign exchange market, JPY appreciation of 22.8% ranks first, followed by USD up by 7.2%, HKD by 6.9%, EUR by 6.6%, AUD by 3.5% and SFR by 4.0%. But only GBP has depreciated, and that was even before Brexit.
• Weddings, which enjoyed the highest increase last year, continues to grow by 5% this year. Celebrity effect plays a significant role affected the price.
• After a strong of strategic price decreases last year, the overall prices of jewelry, watch, luxury accessories and cosmetic products have experienced an increment this year. A Hermes Birkin bag increased fastest, 28.6% year on year. Diamond prices rose again, up to 6%; Gold price bounced back 8.2%.
• Prices of luxury liquor and tobacco and luxury cars are the only two categories which have declined for two consecutive years, by 0.2% and 1.3%, respectively. A case of 12 bottles of 1982 Laffite Rothschild reached US$50K, rose by 11.4%, ranks the top of the luxury wine in China. Porsche 911 bounce back, up 4.9%.
• Leisure entertainment, after a 0.6% decline last year, rose 1% this year. Golf club prices are still down in the dumps: for example, the price of playing 18 holes of Golf in Kunming fell by 33.6%, less than US$300.
• The overall of Luxury consumer price has increased 5.1%, after the first decrease last year, shooting up the fastest in 5 years, much higher than the level of CPI released by the Nation Bureau of Statistics (CPI June 2016, +1.9%). Over the last ten years, the Luxury CPI increased 75% which is more than twice time of the consumer price index.
• Among 124 products, about 60% of them, 74 products have higher prices than last year, 26 of them have lower prices; the other 24 stay constant.

Rupert Hoogewerf, Chairman and Chief Researcher of Hurun Report, said, “Luxury property, health and education drove up the Luxury Consumer Price Index this year, coupled with a decrease in the value of the Chinese Yuan against most of the major currencies.”

This is a brief translation of the original Chinese press release. Please refer to the Chinese press release for the full and complete press release.

Over the past year, the overall of 2016 Luxury Consumer Price Index (Luxury CPI) had an 5.1% increased, reached the peak among last 5 years, more higher than the level of CPI released by the Nation Bureau of Statistics (CPI June 2016, +1.9%).Over the last ten years, the Luxury CPI increased 75% which is more than twice time of the consumer price index.

Among of all categories, luxury property price has increased most reached 13% which is close to the gains of 2014 compared to last year 1.9% decline; followed by healthcare, which is increasing for three consecutive years, up 11.7% this year; top school education price has been in uptrend for one decade and increase from last year which reach 6.2%; this year, luxury travel market has recovered the uptrend compared with the last two years, rose 5%. Wedding market, which enjoyed the highest increase last year, has stably increased by 5% this year. Watch and Jewelry has overall increased 3.9% after a fall of 3.6% last year; luxury accessories and cosmetic products have increased 2.9% after a strategic reduction of 2.9% last year; Leisure entertainment has rose by 1% this year after 0.6% declined last year; jets and yachts has recovered 1% after a bigger declined by 10.5% last year; Prices of luxury liquor and tobacco and luxury cars are the only two categories which have declined for two consecutive years, by 0.2% and 1.3%, respectively.

Among 124 products, about 60% of them, 74 products have higher prices than last year, 26 of them have lower prices; the other 24 stay constant. There appended 18 new commodities over last year, including 8 oversea properties, 2 business jets and 2 luxury travel and etc.

Among of 124 commodities, 22% are imported. Comparing with the same period of last year, foreign exchange rate has been in various degree of increase, by 10 June 2016, in the foreign exchange market, JPY appreciation of 22.8% ranks first, followed by USD up by 7.2%, HKD by 6.9%, EUR by 6.6%, AUD by 3.5% and SFR by 4.0%. But only GBP has depreciated, one of reason might be the effect of Brexit. Till the final result of Brexit was published on 24 June, GBP was declined 4%.

The distribution of wealth in China

According to Hurun Research Institute Wealth Report ending in May 2015, individuals with CNY 10 million among Mainland Chinese HNWIs number 1.21 million, an increase of 120,000 from the previous year, a growth rate of 11% that sets a record high. Individuals with CNY 100 million among the HNWIs group number 78,000, an increase of 11,000 that represents a 16% growth rate.

This year, Chinese gifting bounces back 15%. Watch and Electronic products were received the best gift by the consumers compared to last year. For the next two years , over 80% respondents are positive on the Chinese economy, but there are only 27% are ‘extremely confident’ in the economy, much lower than 35.8% of last year.

This year, the richest are still under the great pressure with less holidays. Jogging is the most popular sports for Chinese super-rich. Non-smoker increased from 41% to 46%. 65% female refused to become smoker. Social network tends to become the main source of information. Wechat makes more people relying on digital media, which is especially obvious within under 30 year old respondents.

Generation Y Chinese Luxury Travelers Come of Age

China’s young luxury travelers go abroad every 3-4 months, mainly for leisure. They spend US$65,000 on tourism per year and US$34,000 on travel shopping. Compared with their last generation, new generation demand personalized luxury experiences, Wi-Fi, and next generation guest services on smart devices as standard.

Young luxury travelers primarily receive information through official WeChat subscription accounts, mainly in WeChat Moments shares from friends and WeChat official accounts.

For further details on the Hurun Luxury Consumer Price Index (Luxury CPI), please click here.