KUALA LUMPUR, Jan 31 — Malaysians are set to stay prudent with their expenses and remain “bargain hunters” for the foreseeable future, according to a Malaysian Institute of Economic Research (MIER) report.
The report on its latest quarterly survey of consumer sentiments found that respondents were less optimistic in the fourth quarter of 2018.
“Consumers are heading into the new year 2019 with caution and pragmatism,” the MIER said in its report released yesterday.
The MIER noted that consumer sentiments had taken a beating since Q2 2018, as the economy was still on the mend and that there was a slack in job growth and paltry salary increments.
The report said lower optimism regarding the domestic economy and global outlook may also likely be undermining the current mood in the Kuala Lumpur stock exchange.
“And yet-to-recover stock prices, with their unfavourable impact on household wealth, will put the pause on consumer spending plans in the near term,” the report said.
“Indeed, consumers look set to wise up on their spending in the coming months, stretching the ringgit for all its worth as much as they can.
“They are not going on a shopping spree soon, preferring to remain bargain hunters for now, particularly as more consumers this time than the prior quarter are expecting prices to rise in the first half of 2019,” it added.
From its surveys, the MIER found its Consumer Sentiments Index (CSI) to have dropped in Q4 2018 to 96.8 points, down from 108.8 points in Q3 2018, and further down from the extraordinary 21-year high of 132.9 points for Q2 2018.
In its Q4 2018 report on the CSI, MIER said Malaysians’ “ambitious” shopping plans in the preceding two quarters had likely been fuelled by year-end bonus payouts and festivities, but predicted that their appetite and plans to shop will take a backseat in the coming months in the post-holiday season amid factors such as lower job and income expectations.
In its survey, consumers from the low-income, rural and east coast of Peninsular Malaysia were the most affected among those who said their household finances worsened, with these same group also most worried about potential pay cuts and job availability.
As for inflation concerns, MIER said those expecting rising prices increased from 63 per cent (Q3 2018) to 67 per cent (Q4 2018), noting that this was still lower than the typical 70 to 90 per cent in past surveys and that the last time a similarly low range was recorded was in Q2 2009 at 68 per cent.
“As much as consumers dread the persistent high cost of living amid income gains, if any, at a snail’s pace, they may have learned to live with these realities by now,” it said.
Comparing Q4 2018 to Q1 2018, MIER said anxieties over expected rise in prices are predominantly stronger in the middle-income, rural and eastern categories. The anxieties were despite the low inflation rate of around 1 per cent for 2018.
Those in the high-income group, urbanites or those living in the central region of Peninsular Malaysia were more likely to give positive responses to the same issues in the survey.
The survey noted that its respondents’ demand for television, washing machines, refrigerators and personal computers are expected to be flat in the coming months, with most high-income households and urban residents more likely to shop for them soon.
Those likely to buy furniture and cookers which are also less in demand for the coming months are likely to buy in the high-income group, urbanites and from the southern region of Peninsular Malaysia, the report said.
Only cars recorded a higher level of interest in Q4 2018 as potential purchases by consumers with the high-income urbanites preferring new cars and the middle-income and rural respondents eyeing used cars, the report said.
What about the retail industry?
In a separate report on its quarterly Retail Sector Survey, the MIER said its Retail Trade Index (RTI) has fallen to 71.9 points in Q4 2018, down from 153.8 points in Q3 2018.
“Seasonality has nothing to do with this, as the fourth quarter is traditionally a bustling period, with a busy year-end holiday shopping period,” the report said, noting the dip below the 100-points threshold indicate that business growth for the retail industry has slowed down.
MIER suggested that consumers grappling with the rising cost of living were being cautious in their spending, further noting that many were readjusting their budgets despite the “perpetual hustle and bustle” in shopping malls.
“The high volume of shopping mall patrons has not been reflected in the number of sales transactions. Apparently only a small percentage of patrons do ‘serious shopping’ or actually make purchases, according to a source from the retail industry,” the report said.
Among other things, MIER noted that retailers are suffering from prolonged sales.
“Consumers may love sales, but this practice squeezes margins for retailers, which prevents them from reinvesting in the business and improving product and service quality, according to industry players,” it said.
Yesterday, the MIER said the spike in its Consumer Sentiments Index and Business Conditions Index in Q2 2018 was due to consumers and businesses feeling hopeful after the historic change of government in the May 2018 elections, while the subsequent declines in Q3 and Q4 2018 were due to global economic conditions beyond the control of the government.
