PETALING JAYA: Malaysia’s consumer sector is heading into the final stretch of this year on a firmer footing, supported by resilient household spending, easing cost pressures and a strengthening ringgit, according to MBSB Research.
The research house maintained a positive stance on the consumer industry, citing “steady domestic demand, targeted fiscal support and a gradually improving cost environment heading into 2026”.
It reported that retail consumption remained robust in October, with Malaysia’s retail trade rising 6.8% year-on-year (y-o-y) to RM69.33bil.
Growth was broad-based, led by non-specialised stores, food, beverages and tobacco, and other specialised retailers.
On a month-on-month basis, retail sales expanded 0.6%, reflecting what MBSB Research described as “steady consumer activity”, underpinned by food-related spending and discretionary purchases.
Cumulatively, the research house revealed that retail sales for the first 10 months of this year grew 6% y-o-y, signalling resilient household consumption even as growth normalises.
It pointed out that a stable labour market continues to provide an anchor for spending, as the unemployment rate held at 3% in October, its lowest level in a decade, while employment growth of 3.1% continued to outpace labour force expansion.
The consumer price index also remained contained, with headline inflation at 1.3% and core inflation at 2.2%, propping up purchasing power.
MBSB Research said: “Overall, stable employment conditions and moderate price trends continue to support household purchasing power and private consumption momentum.”
Looking ahead, the research outfit expects consumption momentum to remain supportive, bolstered by fiscal measures under the Madani Economy framework.
It said higher allocations for Sumbangan Tunai Rahmah and Sumbangan Asas Rahmah cash assistance in Budget 2026 are expected to lift disposable incomes, particularly among lower and middle-income households.
Tourism-related initiatives under Visit Malaysia 2026 are also likely to provide an incremental boost to retail and food and beverage activity, especially in urban and tourist-driven locations.
Meanwhile, MBSB Research also observed that Malaysia had welcomed 17.8 million tourists in the first eight months of this year, an 8% increase y-o-y, before adding that this underscores the steady normalisation of travel activity and highlighted tourism as an increasingly important pillar of domestic consumption.
Higher tourist footfall is expected to support demand for fast-moving consumer goods, convenience retail and casual dining formats, benefitting companies with strong exposure to travel corridors and urban centres.
Further supporting margins is the strengthening ringgit, it noted, with the local currency averaging RM4.15 against the US dollar in November, appreciating 6.3% y-o-y.
The research house said the stronger ringgit “provides a clear tailwind for import-reliant consumer producers, helping to ease input cost pressures and improve margin visibility”.
It reaffirmed its top sector picks as MR DIY Group (M) Bhd
, Aeon Co (M) Bhd and Leong Hup International Bhd, citing their exposure to mass-market consumption, tourism-driven footfall and defensive staple demand.
As the sector heads into 2026, MBSB Research said it believes consumer companies’ pricing discipline and operational adaptability should continue to underpin earnings resilience, keeping the outlook positive despite pockets of cost volatility.
