|People seen shopping for the upcoming Hari Raya although the economy is said to be falling. (Pic by:Hafzi Mohamed/TMR)|
Uncertain economic outlook and higher cost of living had softened consumer spending in the country, a consumer trade association said.
Federation of Malaysian Consumers Association (FOMCA) CEO Datuk Paul Selvaraj said people have been cautious in their spending in the last few months but sentiments were expected to improve closer to Aidilfitri.
“Consumer sentiment is still very poor. The cost of living has increased but they don’t see any increment in their salary.”
“Further, the fact that our ringgit has fallen further against the dollar doesn’t help the cause.” he told The Malaysian Reserve.
The ringgit had slumped below RM3.80 against the greenback, the pegging level used during the East Asia financial crisis of 1997/98. The introduction of the goods and service tax ( GST ) in April had decreased consumers buying power. Worries about economic outlook had dented consumer sentiments.
However, traditionally consumer spending will increase during festivities and with 63% of the country’s population will celebrate Aidilfitri in less than 10 days, brisk sales are expected.
Selvaraj said the association saw an increase in consumer spending during the Chinese new Year celebration and prior to the Goods and Service Tax (GST) implementation.
The trend, he said, had been knocked off track after the implementation of the new tax regime.
“While people start to tighten up their budget spree, they will still spend during promotions just before Hari Raya, especially one week prior to the celebration.” he said.
President of Persatuan Pengguna Islam Malaysia (PPIM) Datuk Nadzim Johan said consumer spending has not nosedived.
“People are still spending like normal amid the hike in price. The association see about 10% to 15% of the consumers who tightened their expenses.” he said.
Nadzim believes consumers have yet to adjust their spending habits.
“They are spending like normal even though there is a hike in price of goods.” he said.
However, he believed the market will see a slowdown in consumer spending after Aidilfitri.