PETALING JAYA: Malaysia’s retail industry has recorded a 4.8% growth for the second quarter of the year compared to the same period for 2016 due to increased spending during the holiday season, according to the Members of Malaysia Retailers Association (MRA).

Based on the Malaysia Retail Industry Report published by the group, after a dismay performance in first three months of this year, the retail industry managed to recover slightly during the second quarter.

For the first six months of this year, the retail sale growth rate was 2.5% compared to the same period a year ago.

“The Hari Raya festival that began in end of May boosted retail sales during this period. Malaysian consumers shopped more with heavy price discounts offered by retailers located throughout the country,” according to the report.

Private consumption continued to climb higher by 7.1% during Q2 as Malaysian consumers are now spending more on dining out, services and internet shopping.

During the latest quarter, the Consumer Sentiment Index conducted by Malaysia Institute of Economic Research (MIER) has slightly improved to 80.7 from 76.6 in the previous quarter.

However, it was still below the threshold level of confidence as Malaysian consumers were still concerned on their rising cost of living and remained cautious in their monthly spending.

Also according to the report, average inflation rate during the second quarter of 2017 slowed down slightly to 4.0% with growth rates during April, May and June were 4.4%, 3.9% and 3.6% respectively.

The top two largest increases were transportation as well as food & non-alcoholic beverages.

“The slowdown in monthly inflation rates during the last three months was mainly due to declining fuel prices,” according to the report.

Despite the encouraging performance from the retail sector, Members of the association are cautious over next three months as they estimated an average growth rate of 2.9% for their businesses during the third quarter of 2017.

The association has also estimated the quarterly growth rate of Malaysia’s retail sector to remain at 5.5%, taking into consideration the growth of 0.3% achieved during the same period a year ago.

“For the rest of this year, the rise of our purchasing power will continue to fall behind the increase in prices of retail goods. More retail goods are expected to raise prices because of higher fuel prices in recent months.

“The full recovery of the Malaysian retail market is highly dependence on external economic demand and ringgit performance for the rest of the year,” according to the report.