KUALA LUMPUR, April 9 – Have you experienced an unexpected increase in your monthly expenses or are you running over your monthly budget? What would be the first thing you would do, amid rising costs resulting from the US-Iran war?
Research unit Rakuten Insight’s latest April survey showed that fewer Malaysians would choose “delay a big purchase” as the number one option when compared to March — they’ve already been doing it.
According to Rakuten Insight’s Malaysia Cost Pressure Pulse (MCPP) survey, 15.3 per cent of respondents in March chose “delay a big purchase” as their first response, as compared to 8.6 per cent in April.
“The things Malaysians could post back, they already have. There is nothing left in the pipeline to defer,” Rakuten Insight said in a press release yesterday evening, noting that this drop of 6.7 percentage points is the sharpest movement in Malaysians’ coping choices.
Instead, more Malaysians are now immediately choosing to cut down on non-essential spending (46.9 per cent in March, 52.1 per cent in April) as their first response.
At the same time, Rakuten Insight’s survey showed fewer Malaysians are choosing to go into debt first to cope with unexpected higher expenses.
“Simultaneously, every form of credit declined. BNPL (Buy Now, Pay Later) as a first response fell from 4.0 per cent to 3.1 per cent. Credit card use fell from 2.3 per cent to 1.7 per cent. Borrowing from family fell from 2.5 per cent to 1.3 per cent,” the research arm of Rakuten Group said.
In other words, the “buy time with credit” and “buy time with delay” options are closing for Malaysians to deal with rising living costs, Rakuten Insight said.
“We’ve now crossed a threshold,” said Min Yao Kong, who leads commercial research at Rakuten Insight Malaysia.
“When both the delay option and the credit option shrink simultaneously, there’s nowhere left to go except austerity. The question is no longer ‘when will Malaysians feel this?’ — they’re already living it,” he said.
Kong told Malay Mail that this data shows Malaysian households going for austerity.
“The austerity in this case is more at the household level, rather than the realm of economic policy, which is what the data shows when it comes to the correlation between lower intention to delay big purchases and the lack of interest in borrowing.”
‘Berjimat cermat’ and beyond: How Malaysians plan to cope with rising costs
Within the next four weeks, fewer Malaysians intend to just react to rising costs.
“The easy reactive cuts have already been made,” Rakuten Insight said, referring to the decline in “reactive, tactical behaviours” such as tracking spending closely, buying more during promotions, and cancelling subscriptions.
Instead, more Malaysians are shifting to planning ahead with “structural, forward-looking” choices, the survey showed.
For example, 19.9 per cent chose the new option in the April survey (switching to made-in-Malaysia products to avoid import price increases), which immediately ranked far higher than those who will cut down on ordering food deliveries (19 per cent) and cancelling subscriptions (13 per cent).
The April survey also showed 12.1 per cent choosing another new option previously not available in the March survey: consolidating or switching from multiple e-wallets into a single e-wallet to maximise cashback returns and rewards.
In the open-ended responses, Rakuten Insight said a small but symbolically significant cluster of Malaysians reported that they are growing their own food such as vegetables to reduce grocery expenses, while also sharing one comment where a housewife said she is doing part-time jobs to cover living costs.
Among other things, Rakuten Insight said the biggest change in its entire monthly tracker since it launched in March is the overall negative economic outlook by Malaysians: 57.4 per cent polled in April now expect their household finances to worsen in the coming months, up 9.2 percentage points from March.
Those expecting their finances to worsen slightly have increased from 37 per cent to 40 per cent, and expecting it to worsen significantly have gone up from 11.1 per cent to 16.9 per cent, while pessimism is shown as those expecting conditions to stay the same has collapsed from 31.2 per cent to 24.3 per cent in just three weeks.
As a whole, a higher percentage of Malaysians polled showed high concern about the rising cost of living.
In a new question in the survey, most of them (76.3 per cent) expected the current disruption to global energy supply from the Strait of Hormuz situation to have a longer-term impact on prices and costs in Malaysia, namely: 24 per cent saying one to three more months; 22 per cent (three to six more months); 31 per cent (more than six months).
Rakuten Insight noted that this means Malaysian consumers have already factored in this as a long crisis and not a passing shock, and are adjusting their spending behaviour to match this.
“When consumers price in six months of pressure, they don’t just cut this month’s dining budget – they start reconsidering whether they need two cars, which subscriptions to keep, and whether it’s worth growing vegetables in the backyard,” said Kong, citing the open-ended responses by survey respondents.
While noting that the two-week US-Iran ceasefire announced yesterday is welcome news, Rakuten Insight noted that consumer confidence would not immediately recover.
“But household balance sheets don’t replenish in a day. Brands and policymakers who assume consumer confidence will rebound as quickly as oil prices risk misreading the recovery entirely,” Kong said.
The Malaysia Retailers Association recently told Malay Mail that the US-Iran war is driving up food costs and logistics costs here, resulting in Malaysian households’ having tighter budgets, being more conscious about value, being likely to postpone big-ticket spending and prioritise essential purchases.
