For the month of January 2022, Singapore’s total retail sales value grew by 11.8% y-o-y to $4.2 billion, beating the market estimate of a 7.2% y-o-y growth.
The improvement in January’s retail sales performance was attributable to the increased spending before the Chinese New Year period, which took place in early February. In 2021, pre-Chinese New Year spending took place mostly in February due to the festive season being in mid-February at the time.
The pent-up demand in line with Singapore’s tighter labour market, as well as the low-base seen in January 2021 are also likely contributors to the demand in retail sales, says UOB economist Barnabas Gan.
In addition, higher oil prices in January may have supported specific sectors such as sales by petrol service stations, which grew 25.5% y-o-y, the fastest in six months, notes Gan. “[This is even as higher input prices as a whole likely contributed to imported inflation and generally higher prices at the start of the year,” he adds.
According to data released by the Department of Statistics (SingStat) on March 4, online retail sales made up a sizeable 12.9% of the total retail sales value during the month, mainly comprising supermarkets & hypermarkets, computer & telecommunications equipment, and furniture & household equipment.
On a seasonally adjusted month-on-month (m-o-m) basis, January’s total retail sales fell 2.5% y-o-y.
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Excluding motor vehicles, Singapore’s total retail sales value for the month grew 15.8% y-o-y, and declined 2.1% m-o-m.
Within the retail trade sector, most industries recorded y-o-y growths in sales. This was led by watches & jewellery, wearing apparel & footwear, as well as department stores, which grew by 29%, 28.3% and 26% respectively due mainly to pre-Chinese New Year spending.
Petrol Service Stations registered a y-o-y growth in sales of 25.5%, due partially to higher petrol prices.
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During the period, motor vehicles fell 12% y-o-y, while optical goods & books fell 5.5% y-o-y.
On a m-o-m basis, most industries recorded declines in sales with the exception of recreational goods, which rose 2.9%.
The m-o-m declines were led by food & alcohol 17.8%.
Looking ahead, retail sales will likely continue to remain supported in 2022, “in line with the positive economic prognosis and recovering labour market,” says UOB’s Gan.
However, the ongoing geopolitical situation may “add uncertainty and further commodity price pressures”.
“Potential front-loading consumer demand in the year ahead could also help retail sales as consumers adjust for the higher GST rates in 2023. However, higher inflation rates especially led by crude oil and food (which may be made worse by geopolitical developments) may continue to lift retail prices especially in 1H2022, underlining some nominal price effects for the subsequent readings,” he writes.
“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,” he adds.
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To this end, Gan has estimated that retail sales will expand by another 6% in 2022, barring the exacerbation of Covid-19 related risks in Singapore and around the region.
That said, the new headwind from 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”.
ING analyst Nicholas Mapa says retail sales can be expected to remain in expansion territory in the coming months ahead, although “we could see some moderation after base effects wash out”.
“Upbeat retail sales will help support the growth narrative for the first quarter of the year. Gains in the near term, however, might be capped in the coming months as base effects wash out and with inflation starting to heat up,” he writes.
“Uncertainty related to ongoing geopolitical developments may also dampen overall sentiment, as will the spike in Covid cases reported last February. Nonetheless, Singapore’s growth momentum does appear to be intact but we may have to cap growth expectations should the ongoing global crisis spark faster inflation that could soften domestic demand,” he adds.
Food & Beverage retail sales
In January, total food & beverage retail sales values grew 9.5% y-o-y to $829 million, as all industries recorded y-o-y expansions.
Of the total sum, 29.1% came from online sales.
On a m-o-m basis, total food & beverage retail sales fell 3.5%.
During the month, food caterers registered the highest y-o-y growth at 47% due to the low base in the year before when demand for catering was low.
Turnover for the rest of the food & beverage industries – restaurants, fast food outlets, and cafes, food courts and other eating places – expanded y-o-y as well.
On a m-o-m basis, sales declined across the board with the exception of food caterers, which grew 2%.
Photo: The Edge Singapore
