Takings at the till in Singapore grew faster in May, helped by a low year-ago base and the continued boost from tourist spending after travel restrictions were eased. Retail sales surged 17.8 percent year on year, extending the 12.1 percent growth in April, according to figures released by the Department of Statistics (SingStat) on Tuesday (July 5).
This exceeded the expectations of analysts polled by Bloomberg, who projected sales to grow by 13.4 percent.
Excluding motor vehicles, growth was even stronger, coming in at 22.6 percent.
“The year-on-year increase in retail sales in May 2022 was mainly attributed to the low base in May 2021 when measures such as international travel restrictions were in place,” said SingStat in a press statement.
Experts said this growth is expected to continue but might be moderated due to higher prices and inflation.
RHB senior economist Barnabas Gan said: “The retail sales momentum will likely stay buoyed into the third quarter as Asia moves on from Covid-19-related fears. Tourism levels have been picking up across Asian economies, including Singapore.”
He added that the tight labour market and reopening of Asia’s borders should support spending. “On the back of domestic demand and tourism-led spending, we think retail sales from an index perspective will likely return to pre-Covid levels by the end of this year,” he said.
But the bright outlook might be muddied by any unexpected worsening of the Russia-Ukraine conflict and China’s economic slowdown, he noted.
Maybank Kim Eng economist Lee Ju Ye added that the surge in inflation and rising mortgage rates will likely result in some belt tightening by consumers.
Consumers are also expected to lean towards lower-priced items as costs go up, added National University of Singapore business professor Lawrence Loh.
“In the near term, retail may face a double whammy of moderation in demand and escalation of costs.”
Within the retail trade sector, most industries recorded year-on-year growth in sales in May.
Discretionary industries such as wearing apparel and footwear saw sales balloon by 98.2 per cent due to the low base in May 2021, when there was lower tourist spending due to travel curbs.
Department stores, which were hard hit by Covid-19 restrictions, also saw sales jump by 73.1 per cent.
This was followed by retailers of watches and jewellery, which recorded higher sales of 60.7 per cent.
Retailers of food and alcohol saw sales rise by 47.3 per cent, while petrol service stations recorded sales increases of 45.8 per cent.
In contrast, sales of motor vehicles fell 10.2 per cent.
Supermarkets and hypermarkets recorded declines in sales of 10.3 per cent, while minimarts and convenience stores saw sales fall by 4.8 per cent.
This was due to the higher demand for groceries in May 2021 when more people stayed home during the Phase 2 (Heightened Alert) period, SingStat noted.
Meanwhile, the sales of food and beverage services grew by 40.1 per cent in May on a year-on-year basis, compared with the 11.6 per cent increase in April.
“The significant growth in food and beverage sales in May 2022 was mainly attributed to the low base in May 2021, when Phase 2 (Heightened Alert) measures were in place, with dining in at food and beverage establishments not allowed for half of the month,” SingStat said.