KUALA LUMPUR, April 9 — Malaysians will still continue to shop and buy amid the ongoing Iran war, but with different spending patterns as they opt for cheaper choices when prices go up, the local retail sector said.

Malaysia Retailers Association (MRA) said prices will likely increase due to the tensions in the Middle East, but told Malaysians that they do not need to “panic buy”.

“The real impact will likely be felt in the next two to three months as existing inventories are gradually depleted.

“We expect grocery prices to trend higher, as suppliers have already indicated upcoming price increases driven by rising logistics costs, packaging costs and potential fuel shortages,” MRA told Malay Mail when contacted before the US and Iran announced a two-week truce.

“Nevertheless, consumers can be assured that major retailers continue to maintain stable stock levels. There is no need for panic buying at this stage,” said MRA, which is a 44-year-old association with some of Malaysia’s largest retail companies among its members.

Both locals, tourists to be more careful with money when shopping 

The Iran war has resulted in flight disruptions in multiple airports in the Middle East, which served as the main transit hubs connecting Asia to long-haul travellers such as those from Europe.

While saying that Malaysia may not be able to achieve its international visitors’ arrival target this year, MRA said the ongoing Visit Malaysia Year 2026 campaign still aims to attract visitors.

MRA noted the VMY2026 campaign may seek to attract more visitors from the Asean region which has already been contributing significant numbers, and while tourists from China may not fully replace long-haul tourists but would help cushion any slowdown in visitor arrivals.

While believing tourist arrivals in Malaysia will likely remain resilient for now, MRA said they “may be more selective and discretionary on retail purchases”.

MRA said Malaysian consumers still remain the central pillar of the economy.

“Malaysian consumers are likely to prioritise essential purchases, shift towards more affordable alternatives, and defer big-ticket spending. As a result, overall retail growth may slow,” it said, after noting the expected spending behaviour of international tourists and locals.

Iran war less severe, less speedy in impact on Malaysia’s retail sector 

MRA said the Covid-19 pandemic several years ago had a “far more severe and immediate impact”, as it caused a sudden drop in footfall and revenue, and led to widespread business closures.

“The Iran war’s current impact on Malaysia remains relatively moderate, as there are no operational restrictions and domestic demand is still stable.

“However, if the conflict persists, prolonged inflation and higher living costs could weaken discretionary spending and pressure retail margins over time,” it said.

In comparison to the Covid-19 pandemic’s immediate impact, the Iran war has a “gradual” impact that will unfold over months as cost increases pass through the supply chain, MRA said.

“Consumers are more likely to adjust by trading down, delaying non-essential purchases, and becoming more price-sensitive rather than stopping spending altogether,” it said.

While both crises pose challenges to Malaysia’s retail sector, MRA said the Covid-19 pandemic was a “structural shock that fundamentally disrupted the ability to operate and spend” and curtailed consumption outright.

As for the Iran war, MRA described it as “cyclical cost pressure that mainly affects pricing, margins, and consumer sentiment”, which will have a slower, more moderate impact on retail and is more likely to “reshape spending patterns over time”.

Other expected impacts to look out for

While expecting prices to go up as suppliers pass on the cost increase, MRA said the bigger worry — if the war continues — is supply-chain disruption.

MRA explained that oil-derived components are used in lots of raw material, especially plastics which are used for packaging.

Noting that the Malaysian government has already started rolling out the “work from home” (WFH) policy for the civil service and government-linked companies, MRA said this was understandable under the current expected circumstances.

But at the same time, MRA urged the government to also take into account the “negative multiplier” effect that the WFH policy may have on retail outlets.

Malaysia’s retail industry outlook for 2026

MRA said essential goods and e-commerce will hold up better in the local retail industry, while there may be softer consumer spending on discretionary or non-essential goods such as fashion, “thus forcing retailers to control costs, optimising operations and pivot towards value-driven strategies”.

Before the war: What the numbers tell us about 2025 

Separately, independent retail research firm Retail Group Malaysia’s (RGM) latest report released on March 19 showed that Malaysia’s retail industry had a 2.4 per cent growth for the entire year of 2025, which was “below market expectation” and below RGM’s prediction of 3.6 per cent.

This came as the fourth quarter of 2025 recorded a “disappointing” retail growth rate of 2.5 per cent, half of what the local retail industry had predicted — as the year-end festive celebration, longer school holiday and higher tourist arrivals failed to boost Malaysia’s retail sales as much as predicted.

“Malaysian consumers continued to shop for goods and services during the year-end holiday season. However, they were careful in their spending. They spent their hard-earned money on goods and services that offered good values at reasonable prices,” RGM said in its three-page “Malaysia Retail Industry Report”.

So even before the Iran war, RGM’s report already showed weaker retail spending by Malaysia’s shoppers.

For 2026, RGM projects that Malaysia’s retail industry would grow by four per cent in retail sales, but noted that this has yet to account for the expected rise in cost of living for Malaysians due to the ongoing Middle East war.

RGM said the war’s major travel disruption of tourists from West Asia and Europe is expected to be temporary and have limited negative impact on Malaysia’s targeted 47 million international visitors this year, adding that high spending by local and international tourists is expected this year amid VMY 2026.

Among other things, RGM notes that the Middle East conflict has resulted in uncertainty on Malaysia’s economic prospects this year, as well as contributing to other challenges such as rising energy prices, surging logistic costs, and local manufacturers facing weaker demand for exports.