The Malaysian Reserve: Consumers spending appetite wanes during economic downturn
Domestic and global economic developments such as supply chain disruptions have resulted in higher costs and, thus, higher prices
CONSUMERS are showing a shrinking appetite to spend, as apprehension over the economy is biting further into consumer sentiments lately, says Malaysian Institute of Economic Research (MIER).
In its latest Consumer Sentiments Report titled “Waning Confidence”, the research firm said the shopping ennui has implications for the economy and as long as demand takes a backseat, price pressures cannot build up any momentum and the slow pace of wages should help the economy to keep the weedy creep of rising prices in check.
It added that, however, domestic and global economic developments such as supply chain disruptions have resulted in higher costs and, thus, higher prices, which are eating into consumers’ disposable incomes and demand.
“Consumer spending always boils down to jobs and incomes. So, while there were more job openings in recent months, the economy is still not creating as many as it should be in order to help put it more firmly back on the tracks of recovery.
“But, unless the labour markets take a turn for the worse, households would still need to be counted on to lend the economy a helping hand in the coming months,” it noted.
The research firm added that except for cars, all items covered in the survey, namely, house, furniture, TV, washing machine, fridge, computer, cooker/oven, charted lower proportions of prospective shoppers compared to a quarter ago.
On that note, MIER said the CSI Index dipped far below the 100-point optimism threshold to a four-quarter low of 86, losing almost 23 points quarter-on-quarter.
It added that consumers gave an unequivocally more downbeat assessment of their near-term finances than their current financial situation, and fewer of them are also expecting the labour market to pick up in the second half of 2022.
“Looking ahead, consumers are set to tighten their purse strings as they become increasingly concerned about their future paychecks.
“They are likely exercising prudence in light of the rising cost of living by prioritising bread and butter issues over major consumer durables,” it noted.
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