Retail sales to expand by 6.0% in 2022: forecast

Domestic retail environment to be supported by further border reopening.

UOB expects retail sales to expand by 6% for the entire year following its surprising 8.7% YoY growth in March.

In a report, UOB said the March figures suggest that the "domestic retail environment has improved in tandem with a tighter labour market."

The analyst said retail sales will likely continue to stay supported for the rest of the year, particularly by the further border reopening and economic recovery, but warned that "geopolitics may add uncertainty and contribute to further commodity price pressures."

"We remain of the view that potential front-loading of consumer purchases this year could also help retail sales as consumers adjust for the higher GST rate in 2023," UOB said.

"In addition, higher inflation rates especially led by crude oil and food (which may be made worse by geopolitical developments) may continue to lift retail prices, especially in 1H22, underlining some nominal price effects for the subsequent readings, the analyst added.

Read more: Retail sales jump 8.7% YoY in March