KUALA LUMPUR, June 6 ― The domestic retail market recorded sluggish growth in the first quarter of this year at only 2.6 per cent compared to the same period last year, according to Retail Group Malaysia.
This latest quarterly result was lower than the 5.4 per cent estimate made by members of Malaysian Retailers Association (MRA) in March.
Despite the overall slow growth, some sub-sectors performed very well. The top performing sub-sector for the first three months of the year was pharmacy and personal care which reported a strong growth rate of 9.2 per cent as compared to the same quarter a year ago.
After two consecutive quarterly declines during the second half of 2017, Department Store sub-sector returned to positive zone. The business of this sub-sector increased by 4.6 per cent during first three-month period of this year.
During the first quarter of 2018, the fashion and fashion accessories sub-sector recorded a moderate growth rate of 2.8 per cent after a strong performance during the year-end holiday last year.
The average inflation rate during the first quarter of 2018 slowed down significantly to 1.8 per cent. The consumer price index recorded relatively higher rate in January at 2.7 per cent but declined both in February to 1.4 per cent and March to 1.3 per cent.
During the latest quarter, the Consumer Sentiment Index by MIER climbed to 91.0, however, it was still below the 100-point threshold level of confidence.
Members of the retailers’ association are hopeful that their businesses will recover by the second quarter of 2018. They projected an average growth rate of 6.0 per cent.
The change in ruling party after the general election on May 9, 2018 is expected to boost consumers' confidence level and increase their willingness to spend. At the same time, the largest festival in Malaysia, Hari Raya, will be celebrated in June this year.
Retailers in the pharmacy and personal pare sub-sector are also optimistic of their businesses with a strong growth rate of 13.0 per cent for the second quarter of 2018.
From June 1, 2018, the new Malaysian government has reduced the Goods and Services Tax (GST) from 6.0 per cent to zero percent.
Retail Group Malaysia has adjusted the second quarter retail growth rate from 3.7 per cent (estimated in March 2018) to 6.3 per cent. This revision is also higher than the latest projection made by MRA members. This new estimate took into consideration the tax holiday during the last month (June) of second quarter as well as Hari Raya celebration at the middle of June 2018.
Many retailers, large and small throughout the country, have taken this once-in-a-life-time opportunity to offer great discounts to attract shoppers to buy. Higher expenditure from tourists, including Singaporeans, is also expected during this period.
Based on the latest quarterly adjustments, the projected retail sale growth rate of Malaysia retail industry in 2018 by Retail Group Malaysia has been revised upwards from 4.7 per cent (estimate in March 2018) to 5.3 per cent.