According to an online survey by The Nielsen Company Hong Kong in early June, the Nielsen Confidence Index declined from 118 last year to 109 in June - its lowest level since 2006.

"We are seeing a shift in Hong Kong people's mind-set," said Nielsen Hong Kong executive director Angel Young Wai-suen.

"Even though Hong Kong is not in recession and we have actually recorded some positive growth based on various domestic economic indicators, the snowball effect of the credit issue, oil price and rising inflation, coupled with the slowdown in the property market and the roller-coaster stock market, have all taken their toll."

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Of 500 respondents surveyed, 53 percent said they are unwilling to spend in the next 12 months while 40 percent said they had done less leisure shopping in the past six months.

According to the Census and Statistics Department, retail sales volume has slowed since the first quarter.

Sales volume growth in June was only 4 percent compared with 11.5 percent in May, 11.6 percent in April and 13 percent in March.

But Hong Kong people are earning more as median personal income has leapt 9 percent this year to HK$11,000, up from HK$10,100 a year ago.

Amid rising inflation, spending on non-necessities declined the most. Per capita spending on luxury fashion items tumbled 33 percent in the second quarter to HK$5,567.

Per capita spending on clothing fell 19 percent to HK$1,702.

"Inflation is turning consumers away from nice-to-have and less critical items," Young said. "Hong Kong people are spending more money on their grocery and daily necessities."