Consumer confidence in Malaysia stood at 98 points, according to the latest Consumer Confidence Index released by Nielsen, a global information and measurement company. This is the first time where Malaysian consumer confidence level dipped below the 100 point since year 2010. An index below 100 indicates pessimism among Malaysians.
“Whilst the Malaysian consumer confidence has slipped below the 100 mark for the first time in three years, Malaysia remains one of the stronger country globally. This is a testament to the fact that whilst Europe and the US continue to languish in recession mode, countries like Malaysia and other Southeast Asian countries are still experiencing a positive growth economy” said Richard Hall, Managing Director for Nielsen Malaysia.
Over a third of the Malaysian consumers surveyed cited the economy as a major concern (35%) followed by the increase in food prices over the next six months. Nearly a quarter of Malaysian consumers are worried about the looming increase of food prices (24%) compared to previous quarter (17%). This concern climbed to second place from fifth position in Q3 2013.
“There is no doubt that consumers feel that prices of goods are on the rise but in reality, inflation remains low based on the latest CPI index released by the Department of Statistics Malaysia, which revealed a 3.2% growth for Q4 2013.” said Hall. “There is increasing competition on supermarket prices of which only the consumers will benefit. Future price increases through the implementation of GST and rumours on further subsidy cuts will be fuelling the decrease in consumer confidence. Hence, Malaysian consumers are stating that they are saving more and clearing debts in anticipation of future price increases.”
When it comes to allocating their spare cash, Malaysian consumers continue to be avid savers, with 63 percent channeling excess funds into savings in Q4 2013, after they have covered essential living expenses (up 6 percentage points). While plans to save for the future saw a strong up-lift this quarter, 45 percent of Malaysians are continuing to clear personal debts such as credit cards and loans, also a six percentage points increase compared to Q3 2013.
Malaysian consumers are diligent when it comes to keeping a check on their general household expenses. Eight in 10 Malaysian consumers changed their spending habit in the past year to save on household expenses. Consumers in Malaysia would continue to cut back to save on household expenses, even when economic conditions would improve. The top three areas where consumers have cut-back include new clothes (59%), out-of-home entertainment (54%) and switch to cheaper grocery brands (52%).
“It is good to see that Malaysian consumers are taking a more prudent approach to savings and paying off debts. This is also probably linked to credit becoming more difficult to obtain and banks becoming firmer in their approach to credit management.” said Hall.
“Although it is not surprising that the Malaysian consumer confidence levels have slipped due to increasing economic pressures, decreased subsidies and an overall perception that prices are rising or going to rise, the Malaysian economy remains strong and inflation is under control.” said Hall. “Whilst the country is not enjoying the boom years of the late 90s and early 2000s, Malaysia is still relatively strong in the region and will continue to enjoy one of the more stable economic