PETALING JAYA: While tourist arrivals should continue to support consumer-facing segments, particularly the fast-moving consumer goods, convenience retail and casual dining segments, higher oil prices remain a significant threat.
“A higher crude price raises distribution and freight costs, increases packaging costs through petrochemical inputs, pushes up fertiliser-linked agricultural costs, and weakens household purchasing power through broader inflation,” MBSB Research said in a report to clients.
It noted the first-round pressure is usually most visible in packaging-intensive and freight-intensive segments – including beverages, household products and modern retail – while the second-round effect is felt across food manufacturers, restaurant operators and other consumer staples through grains, sugar, edible oils and feed-related protein costs.
“Margin risk rises most sharply for companies with limited pricing power, high packaging intensity, and heavier exposure to imported raw materials.
“In a prolonged conflict scenario, the sector would likely face a broader cost reset rather than a narrow fuel-price shock, with the pressure building progressively as inventory rolls over and procurement contracts are renewed,” MBSB Research said.
An analyst told StarBiz that the current Middle East war will continue to result in repercussions “not yet seen”.
“It pays to be cautious, especially on a sector like consumer,” he said.
MBSB Research said if the conflict is sustained over the coming months, the implications for the consumer sector could turn increasingly negative for discretionary players, who would likely be more vulnerable given their limited ability to pass through higher input costs while simultaneously facing weaker demand as staples producers adjust prices, thereby eroding household purchasing power.
“In such an environment, we recommend positioning defensively within staples names that exhibit relatively inelastic demand,” it added.
Kenanga Research in its report said distributive trade sales slowed to 7.3% in January (7.6% in December 2025), as retail activity began to soften despite the run up to Chinese New Year spending period.
“Sales momentum should stay resilient in the near term, supported by festive spending ahead of Hari Raya Aidilfitri.
“Fiscal support will add further lift through the one-off Sumbangan Asas Rahmah RM100 transfers to 22 million Malaysians, Phase 1 Sumbangan Tunai Rahmah disbursements from Jan 19, and the Phase 2 Public Service Remuneration System salary adjustments effective January,” it noted.
Like most research houses, it said the Visit Malaysia 2026 campaign should further boost tourist arrivals, supporting spending into the second half of this year.
“However, the recent escalation in US-Iran tensions may add uncertainty and slightly temper sales momentum,” it said.
Still, it is maintaining its 2026 gross domestic product growth forecast at 4.5%, reflecting cautious optimism amid persistent global uncertainty and rising geopolitical tensions linked to the US-Iran war that may weigh on confidence.
“Even so, growth could edge closer to 5%. Malaysia typically benefits from higher crude oil as a net energy exporter.
“Additional upside may emerge if the global tech upcycle continues and data centre-related investment accelerates in 2026.”
MBSB Research added that Malaysia’s labour market remained stable in January, with the unemployment rate holding at 2.9%, at decade lows unchanged from December 2025.
