KUALA LUMPUR, May 12 — Despite improvements in finances, consumers are currently displaying pessimism with regards to future finances, job opportunities, income growth and inflation, said the Malaysian Institute of Economic Research (MIER).

However, spending plans have remained stable or increased for everything except computers, the MIER quarterly report on consumer sentiments noted.

"While their current finances have improved, the respondents exhibited less optimism on their future financial situation,” it noted.

"At the same time, however, they seemed to be slightly confident in making substantial spending plans, particularly on houses and cars,” it said, adding that this could be due to fear that prices may increase in the future.

In a quarter-on-quarter comparison, the MIER Consumer Sentiment Index (CSI) dropped in the first quarter of 2023 (1Q23) by 6.1 points to 99.2 points, reversing its momentum since the second quarter of last year, said the report.

"The reversal of a positive trend is similarly observed in the employment index,” it noted, saying that the latter had declined by 12.7 points to 109.8 points from the final quarter of last year (4Q22).

The Rahmah initiatives introduced by the government, which began with the ‘Menu Rahmah’ programme, may have helped to reduce the cost of living, it said.

However, respondents of the survey seem to lack any overwhelming positive response towards the Rahmah initiatives, which suggests that the programmes may not be seen as an effective long-term measure in addressing inflation, it added.

The majority of respondents (34 per cent) also feel that job opportunities will remain unchanged, an increase of 8 per cent since 4Q22, it noted.

"This is the first time since 1Q22 that this group outnumbers those who feel optimistic about future job opportunities (28 per cent),” it said.

Besides that, only 19 per cent of respondents indicated an expectation of their income increasing, it added.

"Their pessimism may reflect the generally stagnant level of wages that Malaysians have been facing for many years.

"Furthermore, the predicted slower job market this year should also suppress wage growth,” it said.

Another 85 per cent of respondents also displayed pessimism in terms of declining inflation, which the MIER attributed to the United States’ (US) Federal Reserve hiking the interest rate.

As for spending plans, respondents were asked about plans to purchase houses, cars, furniture and household appliances.

An increase of 2 per cent was indicated for furniture purchase plans compared to 4Q22, but responses regarding housing spending plans were mixed.

More people were planning on purchasing housing in the central (12 per cent) and north (9 per cent) regions, while those hoping to find housing in the east (8 per cent) and south (12 per cent) regions declined.

The report recommended that the government take note of the increasing pessimism in order to draft policies that can convince Malaysians of the effective management of the cost-of-living crisis.

A total of 1,019 households in Peninsular Malaysia were surveyed on their current and expected financial position, short-term economic outlook, perceptions of the economy, and major purchase plans.

The MIER Survey of Consumer Sentiments is conducted with the Merdeka Center for Opinion Research every quarter.