The Malaysian Retail Group projects an annual growth rate in retail sales of 4% for this year, which is up 0.5% compared to the forecast made in November last year.
According to their report, the biggest challenge for the Malaysian retail industry is the rising cost of living.
In comparison, the retail industry recorded a growth rate of 2.2% in 2023 which was below market expectations as the projection by Retail Group Malaysia in November was 2.8%.
He also said that the retail industry contracted in the last quarter of 2023 by 0.2% and retail prices such as food continued to rise.
The Israel-Hamas war that began in October 2023 has led to the boycott of many western brands that are allegedly linked to Israel and its allies.
The prolonged boycott has affected the business of certain retail brands. At the same time, Malaysians are shifting to support other local and regional brands.
Retail sales of various subsectors such as department stores, hypermarkets, hypermarkets, fashion, furniture and other specialty retail stores also saw negative growth ranging from 0.4 percent to 4.4 percent last year.
Regarding the forecast for 2024, it said a 10% sales tax imposed on imported goods worth over RM500 sold online would result in higher retail prices for those goods.
In addition, the increase in the service tax rate from six percent to eight percent since March has caused the retail price of goods and services to be higher.
It also said that the weakening ringgit since last year has put pressure on companies that sell imported groceries or import raw materials and semi-finished goods.
The retail sector is expected to record 2.5 percent growth by the third quarter of 2024 and hopes for 3.2 percent growth for the final quarter.
