KUALA LUMPUR (July 11): Malaysia's wholesale and retail sales accelerated by 7.1% year-on-year (y-o-y) to RM147.9 billion in May 2024 — the fastest pace since 11.9% in March 2023 — thanks to higher retail sales in non-specialised stores, official data on Thursday showed.

Comparatively, April 2024 saw a y-o-y growth of 6.6%, after 5.2% in March, 5.5% in February, and 5.4% in January.

Noteworthy contributors to the May wholesale and retail sales growth included an 8.7% expansion in retail sales, the highest growth rate since April 2023 when the growth stood at 12.9%, according to the Department of Statistics Malaysia.

Meanwhile, motor vehicle sales maintained a double-digit growth rate for the second consecutive month at 10.5%.

The retail sector rose 7.1% to RM62.8 billion and the wholesale segment expanded 4% to RM64.1 billion. Meanwhile, sales in the motor vehicle industry increased 3.2% to RM18.8 billion in May.

The growth in the retail sector was mainly led by sales in non-specialised stores, which expanded 10.7%. In the wholesale sector, other specialised wholesale was up 4.0%. The motor vehicle segment's growth, meanwhile, was fuelled by an 11.1% increase in sales of vehicles, followed by parts and accessories.

On a month-on-month basis, the retail sector inched up 0.3%, while wholesale trade was up 2% and motor vehicle sales climbed 8.8%.

Other than a stable job market and low inflationary pressure, MIDF Research said the approval of partial withdrawal of retirement funds which took effect this month could be a boosting factor for the uptick of overall distributive trade sales.

Looking ahead, the research firm foresees consumer demand staying in expansionary mode amid stable job market, better pick-up in tourism activities, and supportive and accommodative economic policies.

However, there are still downside risks to the demand, especially with potential high inflation expectations and pessimistic consumer sentiment, it said in a note.

MIDF keeps its retail trade forecast at 5% in 2024.

Bank Muamalat Malaysia's chief economist Mohd Afzanizam Abdul Rashid, meanwhile, commented: "The government continues to implement economic reforms, especially in areas relating to fuel subsidies. Consumers are expected to remain guarded in managing their finances."

"The wholesale and retail trade is likely to demonstrate a resilient growth on the back of stable labour market conditions while a cash transfer programme and the latest EPF withdrawal scheme would likely provide support to household spending patterns," he said.