MALAYSIA’s retail trade rose +5.0% year-on-year (yoy) to RM67.33 bil in Aug-25, supported by continued gains across key sub-segments, led by other specialised stores, non-specialised stores, and food, beverages & tobacco.
On a month-on-month basis, retail sales expanded +0.5%, reflecting a steady pickup in consumer activity after July’s pullback of -0.8% month-on-month (mom). The monthly improvement was led by nonspecialised stores and F&B & tobacco, while household equipment softened after earlier gains.
For the eight months of calendar year 2025 (8MCY25), cumulative retail sales rose +5.8% yoy to RM534.0 bil, highlighting sustained household consumption despite a normalising growth pace.
“Malaysia’s labour market remained steady in Aug-25, with the unemployment rate unchanged at 3.0%, sustaining its lowest level in a decade,” said MBSB Research.
Employment growth held at +3.1%yoy, continuing to outpace labour force expansion of +2.8%yoy for the 49th consecutive month since Aug-21, reaffirming sustained job creation and resilient labour demand.
On prices, headline CPI edged up to +1.3%yoy, while core CPI rose slightly to +2.0%yoy, reflecting manageable inflationary pressures. The combination of stable employment conditions and moderate price trends continues to underpin real household purchasing power and steady private consumption momentum.
Looking ahead, retail momentum is expected to remain resilient, anchored by a firm labour market, benign inflation, and continued fiscal support under the Ekonomi MADANI framework.
The increase in Budget 2026 allocations for STR and SARA cash aid will directly enhance disposable household income, sustaining consumption among lower- and middle-income groups.
Meanwhile, the RM500 mil fund allocated to drive tourism under the Visit Malaysia 2026 campaign is expected to spur retail and F&B spending, particularly across urban and tourist-centric areas.
These measures, coupled with ongoing job creation and accommodative financing conditions post-OPR cut, should reinforce sentiment and support year-end spending momentum.
“AEON remains our top sector pick, underpinned by its defensive mass-market positioning and steady rental income from property management services,” said MBSB.
Malaysia welcomed 15.5 mil tourists in the seven months of calendar year 2025 (7MCY25), a +10% yoy increase from 14.1 mil a year earlier, continuing to reach the precipice of post-pandemic travel demand.
The pickup reflects ongoing government-led promotional efforts and Malaysia’s renewed positioning as a safe, stable, and well-connected regional hub for leisure and business travel.
With preparations ramping up ahead of Visit Malaysia 2026, the sector’s recovery is broadening, generating positive spillovers across retail, F&B, and hospitality, and reinforcing tourism’s role as a key pillar of domestic consumption.
“We maintain our POSITIVE outlook on the consumer sector, underpinned by firm macro fundamentals, resilient household spending power, and sustained tourism momentum,” said MBSB.
The recently announced Budget 2026 further strengthens the sector’s outlook, with an additional RM2 bil allocated to STR/SARA, enhancing disposable income and supporting broad-based consumption, as well as a robust social welfare framework aimed at raising living standards and promoting economic inclusion, demand is expected to remain resilient, particularly for staples and mass-market products.
Meanwhile, the RM500 mil allocation for Visit Malaysia 2026 is set to boost retail and F&B activity, benefiting beverage players. —Oct 14, 2025
Main image: okstate.edu
