Retail sales in May rise 1.4%, extending from April's 0.2% growth

Key Concepts:

• Retail Sales Growth (Singapore, May)
• Certificate of Entitlement (COE)
• Electric Vehicle (EV) Sales
• Government Incentives (EV Adoption)
• Consumer Sentiment
• Price Effects
• External Uncertainty (Global Economy)
• Additional Registration Fee (ARF)
• Early Adoption Incentive

Singapore Retail Sales (May): Upward Trend with Mixed Performance

Singapore's retail sales continued their upward trajectory in May, increasing by 1.4%. This follows a 0.2% growth in April. However, the growth was uneven across different retail segments.

Drivers of Growth:

• Car Sales: A primary driver of the overall growth. This coincided with an increased supply of Certificates of Entitlement (COEs) during the quarter.
• Computer and Telecommunications Equipment: This segment also experienced growth.
• Supermarkets and Hypermarkets: Another sector contributing positively to the overall retail sales figures.

Segments Experiencing Decline:

• Petrol Stations: Sales in this sector declined.
• Fashion Retailers: This segment also experienced a decrease in sales.

Analyst Perspective: Moderate Growth Amid Uncertainty

One analyst anticipates continued growth in the retail sector, but at a "reasonable rate" due to global economic uncertainty. The analyst noted that the growth numbers appear more modest due to cautious consumer sentiment and lower price effects. Stable prices resulted in nominal and real retail sales growth being roughly unchanged. The analyst expects modest growth in the coming months due to external uncertainty about the global economic environment.

Electric Vehicle (EV) Sales Surge

Car dealerships report a consistent rise in electric vehicle (EV) sales. Some dealerships are selling over 60% more EVs compared to the previous year.

Government Incentives for EV Adoption:

The increase in EV sales is partly attributed to government incentives. The "early adoption incentive" offers a 45% rebate off the Additional Registration Fee (ARF), capped at $15,000.

High COE Prices and Car Ownership Demand:

Despite high COE prices, the demand for car ownership remains strong. The number of people bidding for COEs consistently exceeds the supply provided by the government. This indicates a continued desire among consumers to own or replace their existing vehicles, regardless of the cost.

Conclusion:

Singapore's retail sales in May showed continued growth, primarily driven by car sales and supported by government incentives for EV adoption. However, the growth is expected to be moderate due to cautious consumer sentiment and external economic uncertainties. The demand for car ownership remains high despite high COE prices.