S’pore retail sales up 13.7% in July as growth slows amid higher inflation

SINGAPORE – Takings at the till in Singapore continued to grow at a slower pace in July as inflation touched new highs, but analysts expect bright spots to remain with major events and the year-end holiday season coming up. 

Retail sales rose 13.7 per cent year on year, cooling from the revised 14.9 per cent growth in June, according to figures released by the Department of Statistics on Monday.

The latest figure was slightly below the expectations of analysts polled by Bloomberg, who projected sales to grow by 13.9 per cent.

Excluding motor vehicles, year-on-year growth came in at 18.1 per cent in July, down from the revised 19.9 per cent increase in the previous month.

However, retail sales rose 0.6 per cent from June, on a seasonally adjusted basis. This reversed a 1.4 per cent dip from May to June.

The year-on-year slowdown in retail sales comes as core inflation, which excludes costs of private transport and accommodation, hit 4.8 per cent year on year in July, driven by higher prices of food, electricity and gas. This was the highest since the 5.5 per cent recorded in November 2008.

Overall inflation for July came in at 7 per cent – the highest in 14 years since it reached 7.5 per cent in June 2008.RHB senior economist Barnabas Gan said some pent-up consumer demand seen at the start of the year may have dissipated, while higher inflation may have dissuaded some retail expenditure.
 
He added, however, that there are still bright spots, largely due to the resumption of the upcoming Formula 1 Singapore Grand Prix, the Great Singapore Sale and front-loading of retail demand before a goods and services tax hike next year.

“As such, we think retail sales growth will persist at double-digit year-on-year expansions in the third quarter of this year,” said Mr Gan.
 
Ms Selena Ling, OCBC Bank’s chief economist and head of treasury research and strategy, noted that July’s retail sales data still marked the fourth straight month of double-digit year-on-year growth.
 
“With the return of visitor arrivals and healthy domestic consumption, most of the retail segments performed relatively well, especially watches and jewellery, clothing apparel and footwear, and cosmetics, toiletries and medical goods, since more workers have returned to the office. 

“In particular, the further relaxation of Covid-related measures has also aided the comeback of food and alcohol,” she said.

Ms Ling added that the retail sector should benefit as the year-end holiday season approaches and with big events in the pipeline, but she cautioned that headwinds such as manpower constraints and rising wage costs remain.