Retail stays steady despite 0.4% dip as festive boom kicks in: analysts

RHB maintains 2% growth outlook amidst a stable economic backdrop and labour.

Singapore’s retail demand is expected to remain resilient in the near term despite a January slowdown, although rising energy costs and geopolitical tensions could weigh on consumer spending later in the year, analysts said.

“We anticipate Singapore’s retail sales growth to remain steady into the first half of 2026,” said Barnabas Gan, group chief economist and head of market research at RHB.

Festive-related spending is expected to support retail sales in the first quarter, given the clustering of major celebrations such as Chinese New Year, Valentine’s Day, and Hari Raya Puasa.

The sector should also remain supported by a resilient economic backdrop and a stable labour market, Gan added.

Retail sales fell 0.4% year-on-year (YoY) in January, reversing a 2.5% increase recorded in December, primarily attributed to the timing of the Chinese New Year, which fell in February this year, according to the Department of Statistics.

Meanwhile, RHB maintains its full-year retail sales growth forecast at 2%.

However, the bank warned that external risks such as recent developments in US tariff rates and tensions in the Middle East could weigh on the sector’s outlook.

“A softer domestic labour market could amplify these headwinds, as rising external uncertainties and weaker corporate earnings may lead firms, particularly in trade-sensitive sectors such as manufacturing, wholesale trade, and logistics, to delay hiring or restrain wage growth,” it added.

Separately, Zavier Wong, market analyst at eToro, pointed to strong demand in discretionary categories, particularly watches and jewellery, which rose 15.1% YoY. He said the surge in jewellery demand coincided with a rally in gold prices.

Singapore investor demand for gold rose 48% to 9.6 tonnes in 2025, the highest on record, according to the World Gold Council’s  Gold Demand Trends report.

“Gold had one of its most extraordinary monthly runs on record in January, gaining close to 25% over the course of the month and briefly touching $6,898 (US$5,400) per ounce,” Wong said.

However, higher energy prices linked to geopolitical tensions could place greater pressure on household budgets in the second quarter of the year, he added.

($1 = US$0.78)