KUALA LUMPUR, Dec 12 — Malaysia’s retail industry grew faster than expected in the third quarter of 2025, expanding 4.9 per cent and prompting Retail Group Malaysia (RGM) to raise its full-year forecast to 3.6 per cent.

RGM said Malaysians were still spending even as retail prices rose and new government policies were introduced between July and September.

These included a new electricity tariff, expanded Sales and Services Tax, higher luxury taxes, Bank Negara Malaysia’s Overnight Policy Rate cut to 2.75 per cent, enforcement of the monthly minimum wage for small firms, and a nationwide RM100 credit under the Sumbangan Asas Rahmah (Sara) programme.

By late September, more than 13 million adults had redeemed the RM100 credit at participating stores, while the government’s move to cut RON95 petrol to RM1.99 per litre helped ease household costs.

Economy and labour market remain strong

Retail sales for the first nine months of 2025 rose 2.7 per cent, while the overall economy grew 5.2 per cent in Q3, supported by steady investment and low inflation of 1.3 per cent.

The labour market remained strong with unemployment at 3.0 per cent and labour force participation reaching a record 70.9 per cent, helping to keep private consumption stable.

Mixed performance across retail sub-sectors

Mini-markets and convenience stores led growth at 18.1 per cent, while fashion rose 10.9 per cent and supermarkets rebounded 5.1 per cent.

Department stores fell 5.5 per cent, personal care outlets dropped 6.8 per cent, and furniture, home improvement and electrical retailers sank 7.1 per cent, while other specialty stores recorded almost no growth at 0.2 per cent.

Expectations for the end of 2025 and beyond

Retailers expect stronger sales in the final quarter of 2025, projecting 5.0 per cent growth fuelled by year-end holidays and more confident shoppers.

Personal care stores are expecting the biggest turnaround with an estimated 14.5 per cent growth, while fashion, pharmacies and mini-markets also predict solid year-end performances.

Furniture and electrical goods retailers are expecting sales to continue dipping in the final quarter.

RGM forecasts 4.0 per cent growth next year, supported by higher government cash aid, civil servant pay rises, and lower fuel prices.

The Visit Malaysia Year 2026 campaign, targeting 47 million foreign tourists, is expected to boost retail in major cities and tourist towns, while Chinese New Year in February and Hari Raya in March should lift first-quarter sales.

Expanded financial assistance under Sumbangan Tunai Rahmah and Sara, e-invoicing rollout, and controlled inflation of 1.3–2.0 per cent are expected to further support spending.

Food and beverage sector sees mixed results

Cafes and restaurants recorded 2.1 per cent growth in Q3, helped by long weekends in September, while kiosks and stalls suffered a 22 per cent drop due to higher costs and slower traffic.

Food and beverage operators expect sales to improve in the last quarter of 2025 as holiday travel and festive spending pick up.