March 2025 retail sales: Is the spring of consumption really coming with policy support?

Today, the National Bureau of Statistics released the macroeconomic "data package" for March 2025. Similar to the previous disclosure, the officially reported growth rate is still about 1pc higher than the growth rate calculated based on historical data, and we still take the officially published data as the standard. Overall, with the help of stimulus policies such as national subsidies, the growth rate of total social retail sales has continued to improve and rise since 2025, and the previously relatively weak growth rate of goods consumption has accelerated even faster, with the growth rate of social retail sales surpassing that of service retail sales. Is domestic demand consumption, supported by policies, really about to usher in spring?

1. Continued improvement in retail sales growth

According to the data disclosed by the National Bureau of Statistics, total social retail sales in March increased by 5.9% year-on-year (the growth rate calculated based on historical data was 4.9%), continuing the trend of marginal recovery in consumption growth since the Spring Festival, with the growth rate accelerating by 1.9pct month-on-month. Compared with 24 months in 2024 when the year-on-year growth rate of retail sales was between 2% and 4%, 2025 has started off well.

Following the overall recovery trend of consumption, online physical retail sales (adjusted) increased by 6.9% year-on-year in March, also accelerating by 1.9pct month-on-month compared with January-February. In addition, the online penetration rate (i.e., the proportion of online retail sales to the total) also showed signs of slow improvement. The online penetration rate in March increased by 0.6pct year-on-year, and the year-on-year increase has been rising in the last three reporting periods. Although the absolute value of the year-on-year increase in online penetration rate is not high, it still shows the "limited" relative advantage of online channels.

By category, from January to March, food and daily necessities grew by 14% and 5.6% respectively, while clothing fell by 0.1%. The trend of residents' stronger willingness to spend on necessities such as food than on discretionary items such as clothing remains unchanged. However, compared with the data released in January-February, the cumulative growth rates of all three categories of goods have improved. Among them, food saw the highest acceleration, reaching 3.2pct.

2. Goods consumption growth surpasses service consumption

By consumption type, the accelerated growth of retail sales in March was attributed to both goods consumption and catering consumption. This month, retail sales of goods (including online and offline) increased by 5.9% year-on-year, accelerating by 2pct month-on-month, surpassing the growth rate of catering consumption. Meanwhile, the growth rate of catering consumption also reached 5.6%, slightly lower than that of goods consumption but still accelerating by 1.3pct month-on-month.

According to our calculations, offline retail sales of goods in March also increased by 3.8% year-on-year, accelerating by 1.5pct compared with January-February. The growth of offline goods sales, which has been relatively weak in the long term, also improved this month.

Separately disclosed, service retail sales in the first quarter of 2025 increased by 5% year-on-year, with limited acceleration compared with 4.9% in January-February. From the perspectives of both the absolute growth rate and the trend of growth rate changes, service retail sales underperformed the overall retail sales.

On the one hand, due to the high base and the return to normal growth, the growth rate of service retail sales has been declining month by month, while goods consumption, which has a lower base and is stimulated by subsidies, shows signs of improvement. The trend of services outperforming goods, which lasted for about two years, may reverse this year? Or at least tend to converge.

3. Sectors benefiting from national subsidies continue to perform strongly

By product category, according to the retail data above designated size, the absolute growth rates of typical discretionary goods such as clothing, cosmetics, and gold and silver jewelry are still lower than those of strong products such as 3C, but except for cosmetics, the growth of other categories improved in March compared with January-February.

Due to the expansion of national subsidies to include tablets and mobile phones at the beginning of the year, in March, household appliances, furniture, mobile phones, sports and entertainment products, and other electronic or household durable goods continued to lead by leaps and bounds, with year-on-year growth rates generally exceeding 20%. The growth rates of household appliances and furniture, which had declined significantly in January-February due to the Spring Festival holiday and front-loaded demand, rebounded in March. The positive effect of national subsidies remains quite significant and has not noticeably weakened, and retail channels or brands with advantages in the above-mentioned sectors are likely to have good performance in the first quarter.

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