Singapore’s total retail sales value fell by 3.4% y-o-y to a total value of $3.2 billion in February, making this the first contraction in six months.
Excluding motor vehicles, total retail sales fell by 1.8% y-o-y to $2.8 billion during the same month.
On a seasonally adjusted m-o-m basis, total retail sales fell 1.2% while sales fell 1.0% y-o-y sans motor vehicles.
Of the total value, 13.6% of the sales took place online, higher than the 12.4% recorded in January. Excluding vehicles, the number of online sales stood at 15.5%
According to analysts from UOB and OCBC, the decline was attributed to the pre-Chinese New Year spending that took place in February 2021, but took place a month earlier in January this year.
“If we take the two-month period of January-February to smoothen out the seasonal effects, retail sales still expanded 4.9% y-o-y or 7.7% y-o-y without motor vehicles,” says Selena Ling, chief economist and head of treasury research & strategy at OCBC Bank.
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The difference in the timing of the pre-Chinese New Year spending underpinned receipts especially in consumer discretionary goods and food & beverage in the previous month, notes UOB economist Barnabas Gan.
Like Ling, Gan has also noted that retail sales had expanded 4.9% y-o-y in the January – February 2022 period, highlighting that retail receipts have continued to grow year-to-date (y-t-d).
Within the retail trade sector, most industries recorded y-o-y declines. This was led by sales of food and alcohol, which fell 16.5% y-o-y.
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Mini-marts & convenience stores and motor vehicles both fell 14.1% y-o-y respectively.
Conversely, cosmetics, toiletries & medical goods saw the highest increase in sales with a 21.0% increase y-o-y. Petrol service stations and watches & jewellery rounded up the second and third increases at 8.8% and 8.3% y-o-y respectively.
On a m-o-m basis, cosmetics, toiletries & medical goods also saw the highest increase in sales at 17.6%, followed by the 6.6% growth in food & alcohol sales.
Department stores saw the biggest m-o-m dip at 11.5% followed by optical goods & books at -7.7% and computer and telecommunications equipment at -7.2%.
“Notwithstanding the year-on-year decline, the latest data suggests that consumer confidence has remained positive amid a tighter labour market given the rise in expenditure for luxury and durable goods in February,” says UOB’s Gan.
In February, total food & beverage retail sales values fell 0.6% y-o-y to $734 million, led by food caterers, which grew 26.3% y-o-y due to the low base in February 2021.
Cafes, food courts & other eating places grew by 1.4% y-o-y, while fast food outlets grew by 0.9% y-o-y.
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These were not enough to offset the 5.7% y-o-y decline in the restaurants sector though.
On a m-o-m basis, total food and beverage retail sales fell 5.7% as restaurants plunged 13.4% y-o-y.
Food caterers also registered a 9.1% m-o-m decline.
Cafes, food courts & other eating places fell 0.5% m-o-m, while fast food outlets improved by 1.4% m-o-m.
Of the total sales, 30.7% of them were made online.
Looking ahead, OCBC’s Ling is keeping her recently-upgraded sales forecast intact at a 3.5% y-o-y growth for 2022 despite the February dip.
This is due to the relaxed measures, which should see retail sales improving since “the domestic labour market remains healthy and wage growth is likely”.
“One thing to watch for, however, is whether the rising inflation and upward interest rate adjustments may start to prompt consumers to consider tightening their belt towards the latter part of this year if the Ukraine war and China slowdown/lockdown continue to stymie the global supply chain, accelerate inflationary pressure, weigh on business and consumer confidence, and if debt financing including mortgage servicing becomes more onerous,” says Ling.
UOB’s Gan is also expecting retail sales to remain supported in 2022, in line with the positive economic prognosis and recovering labour market.
“For the year ahead, we expect that domestic retailers will likely see some support as borders continue to reopen, while further economic recovery would be a lynchpin for domestic retail demand. Barring the exacerbation of Covid-19-related risks in Singapore and around the region, we pencil retail sales to expand by another 6.0% in 2022,” he says.
“The headwind brought on by the Russia-Ukraine conflict may bring downside to growth and upside to inflation outlook, but the situation remains uncertain to make an assessment at this juncture,” he adds.
