Due to a low base year-ago and the sustained boost from tourist spending after travel restrictions were relaxed, Singapore’s cash receipts increased more quickly in May.
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According to data provided by the Department of Statistics (SingStat) on Tuesday, retail sales increased by 17.8 percent year over year, continuing the expansion of 12.1 percent in April.
This exceeded the predictions of analysts surveyed by Bloomberg, who expected sales to increase by 13.4 percent. Growth was much higher when motor vehicles were excluded, reaching 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.
According to experts, this rise is anticipated to continue, however it may slow down as a result of rising costs and inflation.
“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,” said Barnabad Gan, RHB senior economist.
“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,” Gan added.
However, he cautioned that any unanticipated escalation in the war between Russia and Ukraine and China’s economic downturn could cloud the positive view.
The spike in inflation and rising mortgage rates, according to Maybank Kim Eng economist Lee Ju Ye, will probably cause some consumers to tighten their belts.
“In particular, sales of discretionary items such as watches and jewellery and recreational goods may be the most affected,” Lee said.
The majority of industries in the retail trade sector saw yearly sales growth in May.
Due to the low base in May 2021, when travel restrictions reduced visitor spending, discretionary industries like clothing and footwear saw sales soar by 98.2 percent.
Sales at department stores, which were negatively impacted by Covid-19 limits, increased by 73.1 percent.
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Retailers of jewellery and watches came next, recording sales that were higher by 60.7 percent. Food and alcohol retailers reported sales growth of 47.3 percent.