SINGAPORE - Retail sales rose 2.5 per cent in November 2023, compared to a 0.1 per cent decline in October, with the highest growth rates seen for food and alcohol, and motor vehicles, as well as watches and jewellery.

On a month-on-month seasonally adjusted basis, retail sales grew 0.5 per cent, against the previous month’s 0.9 per cent fall, according to figures released by the Singapore Department of Statistics (SingStat) on Jan 5.

Excluding motor vehicles, seasonally adjusted retail sales remained at a similar level as October 2023.

November’s total retail sales value was $4.1 billion.

Online sales accounted for 15.2 per cent of this, higher than October’s 13.1 per cent.

This higher proportion was mainly due to increased online sales during year-end online shopping events such as Singles’ Day and Black Friday, SingStat said.

DBS Bank economist Chua Han Teng said overall retail sales should see some support from Singapore’s inbound tourism as its recovery remains intact, and the bank expects a complete return to pre-pandemic levels in 2024.

He added: “2024’s tourism uptick will be supported by improving flight capacity, upcoming events such as concerts, and the ongoing return of Chinese tourists that would be boosted by the upcoming mutual visa-free travel arrangement between Singapore and China.”

However, UOB economists Alvin Liew and Jester Koh said Singapore’s competitiveness as a tourist destination could be weighed down by structurally higher price levels as compared to the regional Asean economies, in addition to the effects from the strong exchange-rate based monetary policy to anchor inflation.

Online retail sales made up 52.5 per cent of the total sales of computer and telecommunications equipment; 36.4 per cent of that for furniture and household equipment; and 13.5 per cent of the total sales for supermarkets and hypermarkets.

Within the retail trade sector, more than half of the industries recorded year-on-year growth in sales in November 2023, with the food and alcohol industry recording the highest growth of 13.6 per cent.

The motor vehicle industry rose 12.9 per cent, mainly due to higher certificate of entitlement quotas. Retailers of watches and jewellery saw a similar rise of 12.9 per cent on greater demand for jewellery.

In contrast, retailers of recreational goods recorded a year-on-year decrease in sales of 10.6 per cent, and the furniture and household equipment industry a 5.6 per cent drop in November 2023.

Food and alcohol sales were up year on year but down month on month, which could suggest that momentum could be petering out as more Singaporeans travel overseas, said Ms Selena Ling, chief economist and head of global markets research and strategy for OCBC Bank.

On a seasonally adjusted month-on-month basis, sales of motor vehicles rose 5.6 per cent in November 2023. Similarly, retailers of furniture and household equipment saw an increase in sales of 4.1 per cent while department store sales were up 3.3 per cent.

Conversely, sales of optical goods and books declined 8 per cent while sales at petrol service stations fell 6.2 per cent.

Food and beverage services saw sales rise 1.4 per cent year on year, extending the 2.4 per cent growth in October. But on a monthly seasonally adjusted basis, sales fell 1 per cent.

Year-on-year declines were seen for restaurants, at minus 1.1 per cent, and fast-food outlets, at minus 2.5 per cent. On the other hand, sales for food caterers went up 11.9 per cent, while those for cafes, foodcourts and other eating places rose 3 per cent.

December retail sales may taper as more Singaporeans take the opportunity to travel overseas, although this may be offset by some front-loading of big-ticket items ahead of the goods and services tax (GST) hike which started in January, Ms Ling said. She added that retail sales growth in 2024 should improve from around 2.5 per cent in 2023 to around 4 per cent, year on year.

However, DBS’ Mr Chua notes that there are signs of softening domestic consumer discretionary spending, and sentiment could be restrained for higher-end goods, with the kicking in of the higher GST rate.

There would also be some cushion from cash support disbursed in December 2023 and CDC vouchers given out in January 2024, he added.