PETALING JAYA: The consumer sector is expected to remain resilient through the second half of 2026 (2H26), although rising cost pressures and softer spending momentum are likely to weigh on profitability and temper earnings growth across the industry.
As such, investors are most likely to focus increasingly on companies with strong pricing power, disciplined cost management and defensive business models as margins came under pressure.
According to BIMB Research, the sector had entered a more challenging phase despite supportive demand fundamentals.
The research house maintained a “neutral” stance on the consumer sector, noting that retail activity continued to expand even as growth momentum moderated.
“Malaysia’s consumer sector remains fundamentally resilient. However, we maintain a ‘neutral’ outlook as the operating landscape turns more challenging in 2H26,” BIMB Research said.
It noted that retail sales had grown by about 6.3% year-on-year (y-o-y) in recent months, although sales slipped 1.8% month-on-month, signalling early signs of moderation.
The research house said geopolitical tensions in the Middle East had become a key concern, shifting from a tail risk to a primary driver of margin compression through higher energy-related costs.
“As a result, the sector is entering a margin-driven downcycle, with focus shifting from top-line growth to cost discipline and pricing power,” it said.
Within consumer staples, BIMB Research said demand for essential goods remained supported by a tight labour market and low unemployment of about 2.9%.
However, it cautioned that the strong 1H26 performance should not be viewed as a sustainable benchmark.
“While revenue remains stable, growth momentum is easing, reflecting softer macro conditions and rising consumer price sensitivity.”
It said downtrading behaviour was becoming increasingly evident as consumers shift towards lower-priced products to manage living costs, and expects value- oriented players to benefit from the trend.
Cost inflation was expected to be the defining theme in 2H26, with higher logistics, packaging and raw material expenses affecting earnings.
