Retail sales edged higher 0.1 percent from a year earlier in value terms, to HK$44.9 billion ($5.7 billion), marking the 22nd consecutive monthly expansion, and the slowest since June 2017. That compares with a 1.4 percent rise in November.
In volume terms, retail sales grew 0.2 percent in December, compared with a revised 1.2 percent rise in November. That was the slowest since April 2017.
"Retail sales performance would continue to be affected by the cautious consumption sentiment amid moderating global economic growth and the uncertainty stemming from the US-Mainland tensions in the near term," a government spokesman said.
The employment situation and sustained expansion in visitor arrivals should provide some support, the spokesman said, adding that the government would closely monitor the situation.
For the whole of 2018, total retail sales rose 8.8 percent in terms of value and 7.6 percent in terms of volume from the previous year, the sharpest since 2013 when retail sales climbed 11 percent in value and 10.6 percent in volume.
Hong Kong's economy is closely linked to China's, with the city a gateway to the mainland and benefiting from a steady flow of tourists and capital, especially following the launch of major infrastructure projects linking China and Hong Kong.
The Hong Kong Tourism Board will announce December tourist arrivals figures later this week.
Retailers in the financial hub have started to feel the chill from China's slowdown, with the U.S.-Sino trade war and yuan depreciation taking a toll on the Chinese economy.
Earlier this month, jewellery chain Chow Tai Fook Jewellery said same-store sales in Hong Kong and Macau fell 6 pct in the October-December quarter, in its first decline since the last quarter of 2017.
Cosmetic and skin-care products retailer Sa Sa said its December-quarter same-store sales for Hong Kong and Macau slid 3.7 percent.
The Hong Kong Retail Management Association had expected flat growth in the fourth quarter, high single-digit growth for 2018 and low single-digit growth for 2019.
Sales of jewellery, watches, clocks and valuable gifts decreased 4.9 percent in December, data showed, after a revised 3.4 percent drop in November. For the whole year, they were up 13.7 percent.
Medicines and cosmetics rose 6.9 percent in December, compared with a revised 10.5 percent growth in November. For the whole year, they were up 14.3 percent.
Department store sales were up 4.9 percent against a 3.9 percent rise in November, and higher 9.6 percent for the year.
(Reporting by Donny Kwok and Twinnie Siu; Editing by Subhranshu Sahu)
