KUALA LUMPUR, Aug 13 — MIDF Research expects the positive momentum in distributive trade sales recorded in the second quarter of 2019 — which grew by 6.1 per cent year-on-year (y-o-y) — to continue into the third quarter.

The optimistic outlook was underpinned by low inflation, stable job market and supportive monetary and fiscal policy changes such as the overnight policy rate (OPR) cut and stabilised retail fuel price.

"Nevertheless, the high base effect from the tax holiday period last year could influence the outcome,” the research house said in a note today.

Distributive trade hit a new record high at RM112.3 billion in June 2019 despite the contraction in motor vehicles sales and tepid moderation in retail sales growth.

Motor vehicles sales declined by 2.5 per cent y-o-y during the month as festive promotional campaigns ended.

Meanwhile, retail trade continued to expand, but at a slightly lower pace of 7.7 per cent y-o-y, which could be attributed to the higher base effect from the June-August tax holiday period last year which saw consumers ramping up their spending, especially on big-ticket items.

MIDF Research said motor vehicles and retail sales growth were the highest during the tax holiday period compared to rest of the months in 2018.

Meanwhile, wholesale trade, which constituted about 48 per cent of total distributive trade, advanced by 6.4 per cent y-o-y in June-19 — the fastest pace so far this year.

"Looking ahead, we foresee domestic demand to continue increasing in the upcoming months, buoyed by the OPR cut, stable job market and low inflationary pressure,” it added. — Bernama