MALAYSIA’s retail trade maintained a robust pace, growing +5.4% year-on-year (yoy) in December 2024 to RM65.8bil, bringing cumulative consumption to RM764.9bil in calendar year 2024 (CY24).
“This is up from RM720.8bil in CY23 and RM661.1bil in CY22, primarily driven by strong growth in food & beverage (F&B), tobacco, and others in specialised stores,” said MIDF Research (MIDF) in the recent Monthly Sector Report.
Resilient labour market conditions further supported retail sales, with the unemployment rate dropping to 3.1%, marking a near decade low. This improvement was further supported by a steady rise in the labour force participation rate, which edged up to 70.6% in December 2024.
In parallel, headline consumer price index inflation moderated to +1.7% yoy, while core inflation eased to +1.6% yoy in December 2024, following three months of stagnation at +1.8% yoy.
This signals that underlying demand pressures are contained, fostering a stable environment for sustained consumer purchasing power.
Moreover, the delayed RON95 subsidy rationalisation, expected to take effect in mid-2025, continues to provide relief to consumers, with subsidies for 85% of the population cushioning the potential impact of rising fuel prices on household spending.
“Looking ahead, we remain optimistic about the sustainability of domestic consumption, supported by a stable macroeconomic environment, steady employment levels, and salary increments for civil servants,” said MIDF.
The gradual recovery in the tourism sector, coupled with upcoming seasonal spending from Ramadan and Aidilfitri, will further boost retail activity.
Given these favourable dynamics, MIDF foresees strong demand for consumer staples and general merchandise.
Companies such as Aeon are well-positioned to capitalise on this positive environment, driving strong topline growth in CY25 as domestic consumption continues to expand. —Feb 18, 2025
Main image: New Straits Times
