Retail Group Malaysia reported that retail sales are set to rise in Q1 2025 after a weaker Q4 in 2024, with growth at 3.5%. Optimism surrounds the Chinese New Year and school holidays, despite challenges from cost increases and global tensions affecting franchises. RGM projects 4.3% growth for 2025, up from 4.0% prior.
According to Retail Group Malaysia (RGM), Malaysia’s retail sales are anticipated to gain momentum in the first quarter of 2025 after a disappointing performance in the last quarter of 2024. Retail sales grew by 3.5% from October to December 2024, falling short of the projected 4.4% growth and below the 3.8% increase seen in the previous quarter, largely due to rising living costs and shorter school holiday durations.
Retailers remain optimistic, expecting enhancements in sales driven by the upcoming Chinese New Year celebrations and school holidays. Notably, department store cum supermarket operators and the fashion sector are gearing up for significant recovery in early 2025, as reported by RGM.
The unemployment rate has remained stable at 3.2% towards the end of 2024, close to the full employment threshold of 3%. Inflation rates have also been manageable, averaging 1.8% during the last quarter, despite consumers preparing for higher living costs due to policy adjustments such as the planned subsidy rationalisation for RON95 petrol and electricity tariff hikes by mid-2025.
RGM cautioned that although 85% of Malaysian households will continue receiving government electricity subsidies, businesses are likely to face increased operational costs, which may ultimately lead retailers to raise prices for consumers. In light of this, RGM has revised its overall retail sales growth forecast for 2025 to 4.3%, up from the previously anticipated 4.0%. In 2024, retail sales registered a 3.8% increase.
Food and beverage operators in Malaysia are expected to confront challenges related to rising operational costs and a weaker ringgit, which escalates prices for raw materials and ingredients. Furthermore, the ongoing boycotts of several international franchises due to geopolitical tensions may result in more temporary or permanent closures within the retail sector nationwide, according to RGM.
In summary, Malaysia’s retail sector is poised for growth in early 2025 despite a lackluster finish in late 2024. Key drivers include festive shopping and school vacations, although challenges from increased operational costs and economic policies persist. The revised sales growth forecast reflects optimism, but it is tempered by external pressures that could impact both businesses and consumers in the months ahead.
Original Source: theedgemalaysia.com
