Retail Group Malaysia (RGM) cited today (Dec 4) that the retail industry grew by 2.7 per cent from July-September from the previous year to beat expectations amid concerns over inflation and declining purchasing power as the ringgit continued to slide against the U.S. Dollar.
RGM opined that the latest quarterly result was above market expectations in its November industry report as members of the Malaysian Retail Association and the Malaysian Retail Chain Association projected the third quarter growth rate at 1.4 per cent in September 2023.
RGM said continuous recovery of both domestic demand and tourism spending, improved labour market conditions and higher construction activities helped drive growth despite a high-base effect.
The retail industry expanded by 96.0 per cent in the third quarter of 2022 due to re-opening of retail businesses after two years of lockdown.
A quarterly growth of 96 per cent a year ago was the highest growth rate achieved in the history of Malaysia retail industry.
Private consumption increased by 4.6 per cent in the third quarter of this year. Improved consumers’ spending likely resulted from a stable labour market, RGM said.
Still, concerns remain about ringgit’s continued slide and declining consumer spending power.
RGM said that while shopping traffic had returned to pre-Covid levels, purchasing power had been dented by higher cost of living.
Consumer Sentiment Index by the Malaysian Institute of Economic Research in the July-September period dipped to 78.9 points.
It remained below the 100-point threshold level of optimism, the lowest since the second quarter of 2021.
“Although the average inflation rate eased during the third quarter, the prices of many basic necessities and consumer goods were higher as compared to the pre-lockdown period,” it said.
Third quarter inflation moderated to 2.5 per cent but still surpassed the rate between 2011 and 2022.
In September, food and non-alcoholic beverages reported the highest average increase at 5.1 per cent, followed by restaurants and hotels group at 4.4 per cent.
