A government spokesman said the decline in retail sales in March was partly due to a high base of comparison for visitor spending and the Easter holidays.

“Looking ahead, further revival of inbound tourism and rising household income should remain supportive to the retail sector. The government’s efforts to promote a mega event economy and boost sentiment should also help,” he said.

“Yet, the changing consumption patterns of visitors and residents may continue to pose challenges. The government will continue to monitor the situation.”

The poor retail sales figures followed the government’s latest figures on Thursday for gross domestic product growth, estimated at 2.7 per cent year on year for the first quarter.

Across the first three months, which included Lunar New Year and the Easter holiday, retail sales fell 1.3 per cent compared with the same period in 2023.

Online sales in March dipped by 4.7 per cent year on year, with transactions of HK$2.4 billion accounting for 7.8 per cent of the total retail figure. For the first three months, online numbers decreased by 10.7 per cent from the same period in 2023.

By category, sales of jewellery, watches and valuable gifts dropped 17.7 per cent with wearing apparel down 17.5 per cent and fuels 14.5 per cent.

However, sales of medicines and cosmetics increased by 8.9 per cent while motor vehicles and parts registered a 7.6 per cent rise.

In a bid to boost local consumption, HKT and ViuTV, the free-TV service under telecoms group PCCW, have jointly rolled out a “Reward Yourself, Recharge the City” campaign, collaborating with shopping centres, retailers, restaurants and entertainment businesses to encourage the public to spend.

Under the campaign, seven malls and nearly 70 merchants have committed to providing a range of offers, including HK$10 Japanese beef bowls, baby pigeons for HK$9.90 each, half-priced grilled chicken, 50 per cent off second drinks, 63 per cent off skincare and buy-two-get-one-free on red wine.

The offers will be promoted for free through ViuTV channels 99 and 96 as well as on social media platforms and advertising channels of the group.

Annie Tse Yau On-yee, chairwoman of the Hong Kong Retail Management Association, said the sector might have experienced a double-digit drop in business in April because of adverse weather and the continued outflow of Hongkongers spending across the border.

The city’s largest retail association earlier surveyed 70,000 employees from 4,000 shops about the industry’s prospects for April and the first day of the Labour Day “golden week” holiday on May 1.

More than 90 per cent of respondents said they expected sales to decrease, ranging from a single-digit percentage drop to as much as 40 per cent, Tse said.

“Local sales in April tended to be weak as many residents went out travelling or headed north to spend during the Easter break and Ching Ming Festival,” she said.

“Besides, there were a number of bad weather days in April which had a great impact on the sector.”

Tse said sales on May 1 had not been optimistic as most surveyed shops indicated a drop in business from a year ago with many suffering a fall of 20 per cent to 40 per cent.

“About 41 per cent had plans for or undergone closure of outlets. Overall speaking, the retail industry is in a difficult situation amid rising labour costs due to manpower shortages and high rent,” she said.

Arrivals in the first three days of the Easter break this year dropped 35 per cent compared with 2018, before anti-government protests rocked the city and the pandemic wrought havoc on global travel. Outbound trips by residents rose 16 per cent this year against 2018 levels.