Retail sales growth to moderate to 1.0% YoY in 2024: expert

Last year, retail sales grew 2.3% YoY.

Retail sales are likely to grow at a slower pace in 2024 at 1.0%, according to Alvin Liew, senior economist at UOB.

Liew said the “expected easing of labour market conditions whilst tailwinds from the post-pandemic boom in consumer-facing and tourism-related sectors dissipate” will contribute to the moderation of retail sales growth this year.

In the near term, Liew expects a “significant pullback in retail sales.”

“In January 2024, consumers may have already front-loaded their spending ahead of the GST increase. This phenomenon was observed in the past GST hike episodes where retail sales saw a sharp m/m sa decline during the month of the hike,” Liew said.

Retail sales dropped 10.0% YoY in January 2023 from a 1.4% growth in December 2023.

Meanwhile, Liew expects cost-of-living relief measures to be sustained to help households
cope with the recent GST increase in the 2024 Budget.

“Any possible enhancement to the cash disbursements under the Assurance Package (AP) alongside a possible one-off cost-of-living special cash payment in FY2024 could provide an incremental lift to retail sales,” Liew said.