Macau’s inflation rate
Macau’s inflation rate stood at 4.75% for January 2015. The inflation rate in Macao averaged 2.59% from 1999–2015, reaching an all-time high of 9.49% in March 2008 and a low of -3.65% in August 1999. The Statistics and Census Service, Government of Macao SAR (or DSEC), reports the inflation rate in Macao.
The composite consumer price index (or CPI) stood at 103.41 in January 2015 and increased by 4.75% year-over-year. However, on a month-over-month (or MoM) basis, Macau’s inflation rate declined from 5.59% as captured in December 2014. The Composite CPI reflects the impact of price changes on general households.
The Composite CPI for January 2015 declined by 0.03% on a month-to-month basis. The price index of clothing and footwear, recreation and culture, and transportation decreased due to seasonal winter clothing sales, lower package tour prices, and declining gasoline prices.
On the other hand, higher rentals for dwellings and rising charges for domestic services positively impacted the price index of housing and fuel, as well as household goods and furnishings.
When inflation decreases, consumers have greater purchasing power and a higher spending capacity. Greater purchasing power is a positive sign for casino resort companies, including Las Vegas Sands (LVS), MGM Resorts (MGM), Wynn Resorts (WYNN), and Melco Crown Entertainment (MPEL). These economic conditions are also positive for funds like the VanEck Vectors Gaming ETF (BJK), as these companies comprise ~25% of BJK. Investors can also gain broader exposure in the leisure space through ETFs like the Consumer Discretionary Select Sector SPDR Fund (XLY).
Plus, low inflation results in lower interest rates, which can help capital-intensive casino companies borrow at cheap rates in order to finance their future operations.
To learn more about the industry, indicators, and recent trends, please visit Market Realist’s casino sector page.