SINGAPORE: Retail sales rose in March at a slower pace after February’s Chinese New Year-driven surge, and look set to cool in the months ahead due to fallout from the Iran war.
Surging energy prices and supply disruption from the conflict will push up prices, making things less affordable for consumers, though government support measures should lessen the impact.
In March, takings at the till rose 4.8 per cent year on year, down from 8.3 per cent in February, according to data from the Singapore Department of Statistics (Singstat) released on May 5.
Excluding motor vehicles, parts and accessories, retail sales grew by a more modest 3.3 per cent year on year, after an 11.3 per cent increase in February.
On a month-on-month and seasonally adjusted basis, they rose 3.7 per cent from February.
Total retail sales were estimated at $4.7 billion in March, with online transactions accounting for 15.7 per cent of the total.
OCBC bank chief economist Selena Ling said March’s retail sales growth exceeded expectations and reflected a moderation from February’s Chinese New Year-driven surge, noting that the earlier spike had also been supported by a lower base.
Within the retail trade sector, most industries recorded year-on-year growth. Sales of recreational goods and motor vehicles, parts and accessories rose 13.1 per cent and 12.9 per cent respectively, while sales of computer and telecommunications equipment increased 11.9 per cent, partly due to higher sales of mobile phones, said DOS.
In contrast, sales of food and alcohol and department stores declined 6 per cent and 5.7 per cent respectively.
Ling said the key drivers of growth included recreational goods and technology-related items, while gains in petrol service stations were partly linked to higher fuel prices.
She said that some notable segments such as food and alcohol, department stores and furniture and household equipment underperformed, noting that “households may be becoming more selective... amid concerns about stagflation”.
The Iran war, which began at end-February, has triggered fears of stagflation as surging oil prices stoke inflation and stall economic growth.
DBS senior economist Chua Han Teng said the first-quarter performance points to “resilient” consumer activity, supported by labour market conditions and tourism, even as March growth moderated from the February peak.
But he warned that the retail outlook is “clouded by heightened global economic uncertainty stemming from the Middle East conflict,” with consumer spending likely to turn more cautious as inflation weighs on purchasing power and labour market conditions soften.
“Nonetheless, additional government support measures, including front-loaded CDC vouchers and enhanced Cost-of-Living Special Payment, should help cushion retail sales,” he said.
OCBC’s Ling said retail sales may cool slightly in the coming months as consumer confidence is weighed down by the prolonged Iran war and closure of the Strait of Hormuz, as these translate into more cautious business sentiments and business cost increases.
“Businesses are expected to be cautious in their hiring and wage plans amid increased economic uncertainty,” she said.
The Singstat data also showed food and beverage services sales rose 2.3 per cent year on year in March, following a 5.6 per cent increase in February.
Total food and beverage sales were estimated at $1.6 billion, with online transactions accounting for 20.6 per cent of the total.
Within the sector, food caterers recorded a 13.7 per cent increase in sales. Fast-food outlets, restaurants and cafes saw growth of 4.8 per cent, 1.7 per cent and 1.1 per cent respectively.
Foodcourts and other eating places recorded a 1.5 per cent decline in sales compared with a year earlier.
On a month-on-month and seasonally adjusted basis, food and beverage sales fell 2.5 per cent. Restaurants and food caterers recorded declines of 5.9 per cent and 2.5 per cent respectively, while fast-food outlets, cafes as well as foodcourts and other eating places recorded increases. - The Straits Times/ANN
