Consumer sentiments still so despite festive season
KUALA LUMPUR: Consumer sentiments remained soft despite the festive season and short school holidays, as consumers continued to be cautious in discretionary spending, given macroeconomic uncertainties.
In a note yesterday, AmInvestments Bank Bhd said consumer spending on discretionary items will be cautious as the government will introduce a few taxes in 2024, such as a 10 per cent sales tax on imported low-value goods sold online from April 1, a 5.0 per cent to 10 per cent tax rate on certain high-value goods tax (HVGT), as well as a 2.0 per cent increase in the service tax rate from 6.0 per cent to 8.0 per cent rate effective March 1.
“We expect retail players to continue to open new stores and improve the variety of their product offerings. This is to attract higher footfalls in stores to sustain their revenue amid soft consumer sentiments and weaker demand for discretionary goods,” the research firm said.
AmInvestment noted that the Malaysian Institute of Economic Research (MIER) reported a decline in the consumer sentiment index by 15 per cent year-on-year to 89.4 points compared to the fourth quarter of 2022. “Even though inflation remained low, potential subsidy rationalisation in the second half of 2023 could increase inflationary pressures ahead,” it said.
Hence, AmInvestment Bank has maintained its ‘neutral’ call on the consumer sector, which is premised on cautious spending ahead, impacted by downtrading tendencies as consumers seek competitive pricing or unbranded items.
“Key risks include slowerthan-expected economic growth, higher-than-expected unemployment rate, higherthan-expected commodity prices, and slower-thanexpected tourist arrivals,” it added.
We expect retail players to continue to open new stores and improve the variety of their product offerings. This is to attract higher footfalls in stores to sustain their revenue amid so consumer sentiments and weaker demand for discretionary goods
AmInvestments Bank Bhd