Retail sales dip in February due to CNY timing; expected to rebound on S'pore's reopening

SINGAPORE - Takings at the till dropped in February, reversing the increases seen in the months before, according to figures released by the Department of Statistics (SingStat) on Tuesday (April 5).

This was due to the timing of Chinese New Year in 2022, which meant that consumers did their pre-festive season shopping in January this year rather than February. But analysts said Singapore’s easing of Covid-19 restrictions and border reopening bode well for the coming months. 

Retail sales declined by 3.4 per cent in February year on year, reversing the revised 12 per cent jump in January and breaking the five months' run of higher turnover.

Excluding motor vehicles, February retail sales dipped by 1.8 per cent.

But when the Chinese New Year effect is stripped out, retail sales in the first two months of 2022 is up 4.9 per cent from last year.

Experts said the forecast for the coming months is hopeful as Covid-19 restrictions ease and the nightlife sector is reopened from April 19. 

Maybank Kim Eng economist Lee Ju Ye said: "We expect retail sales to swing back to positive growth in the coming months as restrictions ease and the labour market improves.

"The return of tourists following the significant easing of border restrictions starting end-March will also boost sales of discretionary categories, including department stores and watches and jewellery."

UOB economist Barnabas Gan said the latest data already suggests that consumer confidence is positive, given the rise in expenditure for luxury and durable goods in February. 

He noted that sales of watches and jewellery expanded for 13 straight months, while spending also rose for furniture and household equipment, and telecommunications and computers. Higher oil prices likely supported the increase in petrol service station sales. 

However, a prolonged Russia-Ukraine war resulting in elevated energy and food costs may dampen consumer confidence and result in less discretionary spending in the months ahead, Ms Lee said, as consumers would have to spend more on utilities and transport.

OCBC Bank chief economist Selena Ling said: "One thing to watch for is whether the rising inflation and upward interest rate adjustments may start to prompt consumers to consider tightening their belt towards the latter part of this year."

She noted that the war and the lockdowns in China could also continue to affect the global supply chain and accelerate inflationary pressures, while consumer confidence could also dip if debt financing such as mortgage servicing becomes more onerous.

In February this year, most industries recorded year-on-year drops in sales.

Retailers of food and alcohol saw the biggest decline in sales of 16.5 per cent, while minimarts and convenience stores saw sales drop by 14.1 per cent.

Sales of motor vehicles also fell by 14.1 per cent, while takings by supermarkets and hypermarkets slid by 10.8 per cent.

Retailers of optical goods and books saw sales fall by 8.4 per cent, and department stores had takings drop by 6 per cent.

On the other hand, retailers of cosmetics, toiletries and medical goods saw sales jump by 21 per cent.

This was mainly attributed to higher demand for pharmaceutical and medical products, SingStat said.

Petrol service stations recorded higher sales of 8.8 per cent, while retailers of watches and jewellery saw sales rise by 8.3 per cent.

Sellers of furniture and household equipment enjoyed higher sales of 5.2 per cent, while those of computer and telecommunications rose 4.7 per cent.

The Chinese New Year effect was also seen in the food and beverage services sector.

F&B sales declined 0.6 per cent in February this year on a year-on-year basis, a reversal from the 9.3 per cent increase in January 2022.

This was attributed partly to higher sales in February 2021 due to the festive celebrations, SingStat said.

But comparing the performance for the two-month period of festivities, F&B sales increased 4.4 per cent in 2022 compared with 2021.

Restaurants' turnover fell 5.7 per cent year on year in February this year.

However, the other segments recorded increases, led by food caterers that saw sales jump by 26.3 per cent.

This was because of the low base in February 2021 when demand for catering was weak, SingStat said.

The turnover of cafes, foodcourts and other eating places also increased, by 1.4 per cent, while sales at fast-food outlets rose by 0.9 per cent.

The total sales value of F&B services in February 2022 was estimated at $734 million.

Of this, online F&B services sales made up an estimated 30.7 per cent, an increase from the 29 per cent recorded in January this year.

The estimated total retail sales value in February 2022 was $3.2 billion.

Online retail sales made up an estimated 13.6 per cent, higher than the 12.4 per cent recorded in January.