KUALA LUMPUR, Feb 4 — With no end to the Covid-19 pandemic in sight, inflationary concerns have grown amongst middle-income consumers, a survey conducted by Malaysian Institute of Economic Research’s (MIER) revealed.
Its Fourth Quarter ‘Consumer Sentiments Survey Report’ revealed that the Covid-19 pandemic has pumped up inflationary expectations, with some 65 per cent of the respondents in agreement over such fears, the highest across four quarters.
“This may suggest that despite the government’s urge to retailers not to raise prices, signs of stronger pricing power look likely to be already in place.
“After all, when it comes to prices, consumers are the best watchdogs.
“But with no end to the Covid-19 pandemic in sight anytime soon, the overall inflation outlook may not be as benign as the price indexes suggest,” it said.
The report added that concerns about inflation were highest in the northern states, with 69 per cent of the respondents revealing such worry and rural dwellers being more fearful of the rising price level than their urban counterparts.
It cited the latest MIER’s Consumer Sentiment Index (CSI) recording a drop of 6.3 points on the quarter (now 85.2), adding that persistent stay below the 100-point threshold level of confidence indicated that consumers are losing faith in the economy and their well-being going forward.
“The continuing threat of the Covid-19 pandemic has likely zapped consumers’ confidence and cut into their buying power, amid challenging labour market conditions, which is why they are planning to rein in their spending in the coming months.
“Expectations tend to drive consumer spending,” it said.
The report also said household finances at year-end was the weakest in nine months with respondents who reported being worse-off than before also rose to a three-quarter high of 42 per cent, even surpassing the previous year’s 40 per cent.
“While the majority (47 per cent) did not see any change in their incomes in 4Q20, those who enjoyed better finances recently fell to 11 per cent from 16 per cent a quarter ago,” it said.
Amid concerns over inflation, job outlook for early 2021 is also generally lackluster with most respondents believing that either the availability of jobs will decrease further or remain unchanged in the months ahead, with 36 and 24 per cent responses respectively.
“Among those who are expecting more vacancies to open up soon, the high-income, urban, northern and eastern households are the most optimistic, with votes totalling 24-29 per cent.
“Of those who responded negatively, most of the responses totaling 36-43 per cent were contributed by those in the low-income, urban, rural and south categories,” it said.
Plagued with the lack of job security and weak household finances, the latest results also revealed that there was less willingness among consumers to take on the huge financial commitment of paying off a house or car mortgage at present.
The report said it was unsurprising that consumer spending plans into the new year was one of caution, prudence, and anxiety as uncertainty loomed on the economic horizon.
“Attesting to this is the latest results which show that only 13 per cent may turn house hunters soon, down from 15 per cent a quarter ago.
“As for plans to buy a vehicle, 10 per cent disclosed having these plans for the coming months, down from 11 per cent in 3Q20 and 12 per cent in 4Q19,” it said.
“With shopping plans looking sedated, consumer spending will likely show less muscle in the coming months,” it said.
The survey involved a total of 1,000 respondents polled quarterly in conjunction with the Merdeka Centre for Opinion Research covering peninsular Malaysia.