Inflation could moderate retail sales growth in Q4 22: analyst

Experts said retail sales may expand 10% in 2022.

Whilst there could still be retail sales growth for the remaining months of 2022, it could be offset by downside risks including inflation that would influence consumer spending and reemergence of infections.

In a brokerage report, UOB said it sees domestic consumption to enhance domestic consumption due to reopening of borders that started in late April.

It also sees growth stemming from return of various physical events.

"We believe domestic retailers will likely see continued domestic and external support, complemented by the return of major events such as various sports, concerts and BTMICE activities (Business Travel and Meetings, Incentive Travel, Conventions and Exhibitions) attracting tourist arrivals, while the tight domestic labour market will also contribute to domestic consumption demand," said UOB analysts.

It expects "retail sales to expand by 10% in 2022 (up from 8.5% previously)." This however "which implies a more moderate forecast of around 6.6% growth in the fourth quarter of 2022."

For Barnabas Gan, senior economist at RHB Singapore, he expects retail sales momentum to still be positive in the remaining months of 2022.

"We forecast retail sales growth at 10% YoY in 2022, with the balance of risk tilted to the upside," Gan said.

Gan said positive retail sales may be seen for the rest of the year but it could change in the first half of 2023 given the economic situation.

The comments were made after the government reported that retail sales growth went up 11.2% YoY in September 2022.