KUALA LUMPUR (April 15): The domestic consumer sector, particularly staples, should see resilient demand through 2026 amid cost pressures from the Middle East conflict, supported by a decade-low unemployment rate and manageable headline inflation, said MBSB Research.
“Retail spending remains resilient despite mild sequential moderation,” MBSB said in a note on Wednesday.
MBSB said Malaysia’s retail trade rose 7.5% year-on-year to RM70.07 billion in February 2026, reflecting sustained consumer demand, adding that the growth remained broad-based across key subsectors, led by non-specialised stores, and food and beverages (F&B).
Moving forward, however, the research house warned that the conflict in the Middle East has introduced new risks to the supply chain.
Escalating tensions have begun to push up the costs of fuel, freight, and fertilisers, which could eventually trickle down to consumer prices.
MBSB said sustained high oil prices could drive broader cost inflation through freight, packaging, fertiliser-linked agriculture, and imported inputs, leading to gradual margin compression — with discretionary players more vulnerable due to weaker pricing power and potential demand softening.
That said, input costs for F&B manufacturers are mixed: the prices of soft commodities like cocoa, sugar, and coffee have retreated significantly from their peaks but other essential materials are surging.
PET resin, used extensively in plastic packaging, has jumped 38.5% due to its correlation with oil prices, while crude palm oil (CPO) prices have risen 14.4%.
“Even with risks of higher material costs, we view that such risks may apply to other countries too,” MBSB Research noted, adding that a relatively stronger ringgit compared to last year is helping to buffer the impact of imported inflation.
In the poultry sub-sector, egg prices have stabilised, easing roughly 1% to 2% month-on-month.
Conversely, chicken prices continue to strengthen, rising 2.2% year-on-year, providing a boost to producers’ margins despite higher costs for animal feed such as soybean meal and corn.
MBSB maintained its 'positive' call on the consumer sector, advising investors to take a defensive stance by focusing on companies that provide essential goods and value-for-money options.