Consumer spending to stay selective

By the Editorial Team · Tuesday, September 15, 2026

Malaysian consumers are maintaining cautious spending habits by focusing on essentials and value options, leading to a 2.5% retail growth in Q2 2026 that fell short of expectations. This cautious behavior has caused consumer staples to outperform discretionary goods, with analysts expecting a gradual recovery supported by government aid and increased tourism later in the year.

Malaysian consumers continue to exercise caution in their spending habits despite signs of improving economic conditions, with a preference for essential goods and more affordable alternatives. Data from Retail Group Malaysia (RGM) shows the country’s retail sector grew by 2.5% year-on-year in the second quarter of 2026, a figure that was below earlier expectations.

Research from BIMB Research highlights that consumers are shopping less frequently, actively comparing prices, and increasingly opting for discounts, vouchers, and generic brands. This shift has contributed to a divergence in earnings within the consumer sector: consumer staples, which include essential goods, saw earnings rise by 27.8% year-on-year, whereas consumer discretionary sectors experienced a 10.3% decline in earnings over the same period. The trend reflects a broader reprioritization toward necessary items over non-essential spending.

CIMB Research projects that consumer staples will remain resilient due to steady demand for daily necessities, which are relatively inelastic. Businesses with expanding production capacity, broader distribution networks, and competitively priced products are expected to better maintain volume growth in this segment. Conversely, the discretionary segment, which relies more heavily on lifestyle and aspirational purchases, is likely to face ongoing challenges as consumers continue to reduce spending on higher-ticket and non-essential items.

Value-oriented retailers are anticipated to perform relatively well, supported by consumers’ continued prioritization of affordability and tendency to trade down. Convenience stores are also expected to sustain revenue growth through network expansion, modest same-store sales increases, and recurring daily purchases of items such as ready-to-eat food, beverages, and tobacco.

Looking ahead, analysts are cautiously optimistic about an improvement in consumer spending during the second half of 2026. Factors such as government assistance programs, targeted subsidies, and increased tourism-related expenditure are expected to support this recovery. RGM forecasts retail sales growth to accelerate to 4.7% in the third quarter, while CIMB Research predicts a stronger rebound in the fourth quarter.

Additionally, potential fiscal measures linked to the upcoming election cycle could temporarily elevate household disposable income, particularly for lower- and middle-income groups. The government is also reviewing a possible minimum wage increase, with the next mandatory review scheduled for February 2027.

Despite these positive indicators, both research firms maintain a neutral outlook on the consumer sector, emphasizing ongoing cautious spending behaviors and the uneven recovery prospects across different retail segments.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.