Malaysian consumer spending remains resilient despite rising oil, utility and logistics costs, with targeted fuel subsidies and household assistance helping to cushion purchasing power, according to MBSB Research.
The research house maintained its POSITIVE view on the consumer sector, supported by stable employment, manageable inflation and government assistance through programmes such as Sumbangan Tunai Rahmah (STR), Sumbangan Asas Rahmah (SARA) and targeted fuel subsidies.
Malaysia’s retail trade grew 6.4% year-on-year to RM71.31 billion in July 2026, although sales eased 1% from RM72.02 billion in June. For the first seven months of the year, retail trade increased 6.8% to RM498.4 billion.
Growth remained broad-based, led by other specialised stores, which expanded 7.6% year-on-year, followed by non-specialised stores at 7.2%, food, beverages and tobacco at 6.4%, and household equipment at 3.1%.
MBSB said the moderation in July represented a second consecutive month of slower annual growth following May, reflecting fading festive spending and some normalisation in discretionary consumption. Nevertheless, continued strength in non-specialised retail and food and beverage spending points to resilient demand for everyday necessities.
The labour market is also providing support. Malaysia’s unemployment rate remained at 3% for a fourth consecutive month in July, while employment increased 1.1% year-on-year to 16.85 million people.
Inflation, meanwhile, remained relatively contained, with headline consumer price inflation easing to 1.8% in July from 1.9% in June, while core inflation also stood at 1.8%. Food inflation accelerated, however, highlighting the risk that higher energy, agricultural and supply-chain costs could eventually erode real household purchasing power.
The government has stepped up measures aimed at cushioning households from higher living costs. The Finance Ministry has allocated RM15 billion for STR and SARA in 2026, while the basic monthly entitlement under BUDI MADANI was restored to 300 litres from Sept 1. Eligible consumers continue to receive subsidised RON95 at RM1.99 per litre and diesel at RM2.10 per litre.
MBSB said these measures, together with wage and income support, should help sustain household consumption even as higher global energy prices feed into business, transport and logistics costs.
Tourism Supportive, But Not Yet A Major Catalyst
Tourism is providing an additional, albeit uneven, boost to consumer spending.
Malaysia recorded 12.8 million tourist arrivals in the first half of 2026, broadly unchanged from 12.9 million a year earlier. MBSB said the relatively flat performance suggests tourism remains supportive of retail and consumption but has yet to generate a meaningful acceleration in consumer-sector earnings.
The research house sees clearer tourism benefits for businesses exposed to tourist-heavy malls, local food and beverage concepts and beverage consumption. It maintained BUY calls on AEON with a target price of RM1.61 and Oriental Kopi at RM1.34, while F&N, Spritzer, Life Water and QL Resources were rated NEUTRAL.
However, MBSB cautioned against treating tourism as a broad discretionary-spending catalyst given softer arrivals from several source markets during the second quarter.
For the wider consumer sector, MBSB continues to favour defensive staples and value-oriented retailers, where demand is more visible and consumers trading down to cheaper alternatives can provide support.
Its top consumer picks remain 99 Speed Mart with a RM4.37 target price, MR D.I.Y. at RM2.13, Leong Hup at RM1.03 and Nestlé Malaysia at RM116.10.
The research house said the main risk to its constructive consumer outlook remains a prolonged increase in energy, food and logistics costs that eventually overwhelms the buffer provided by stable employment, contained inflation and government support.
