Illustrative image (Source: freemalaysiatoday.com) The devaluation of the ringgit and current political issues in Malaysia are affecting the country’s consumer sentiments, negatively impacting the local retail sector, according to the Retail Group Malaysia (RGM).
According to RGM Managing Director Tan Hai Hsin, the weakening ringgit is affecting the cost of goods due to higher import costs leading to a hike in retail prices.
Higher import costs are burdening all retail sub-sectors from grocery stores, restaurants, clothing shops, and furniture stores to electrical and electronics stores, Tan said.
The higher retail prices will be more apparent by the third quarter of this year, dragging local purchasing power down further by then, he noted.
The ringgit has dropped to 3.95 per USD, its 17-year low.
The instable current political situation in Malaysia is negatively affecting consumer sentiments, causing frustration, confusion and uncertainty of their country’s future. As a result, consumers are less willing to purchase, the director added.
He hoped that the present monetary and political trends are only temporary and would be resolved by the fourth quarter.
He believed the goods and services tax (GST) has also been weighing down retail sub-sectors since April 1, causing the revenue of many retailers to fall by 20-50 percent.
Last month, the Malaysian Retailers Association lowered the projected sales growth rate of the sector for the third time this year from 4.9 percent to 4 percent as consumers limit spending due to higher costs of living and operating businesses with the weak ringgit.-VNA
