Singapore’s retail sector experienced a mixed start to 2026, with sales showing a 3.5% year-on-year growth in January and February, according to a report by UOB Global Economics and Markets Research. This improvement was underpinned by a resilient labour market, with a higher job vacancies-to-seekers ratio and stable redundancy levels in the fourth quarter of 2025.
However, the report highlights a seasonally adjusted 4.1% month-on-month decline in February, following a 6.0% increase in January. This drop is attributed to front-loaded purchases ahead of the Lunar New Year. Nine out of 14 retail subcategories, including wearing apparel, footwear, and supermarkets, saw declines.
Looking ahead, the outlook for retail sales in Singapore is clouded by several challenges. The ongoing US/Israel-Iran conflict is expected to dampen consumer sentiment, whilst uncertainty over supply chain disruptions and rising energy prices could lead to broader inflationary pressures. These factors may also affect hiring sentiment, potentially impacting consumer spending.
Additionally, the sharp rise in jet fuel costs, now exceeding US$200 per barrel, has led to increased airfares, which could deter tourist arrivals. Despite these challenges, there is a potential silver lining as reduced outbound travel by residents might boost domestic spending.
The report suggests that whilst early 2026 showed promise, the remainder of the year could see retail sales facing significant headwinds due to these external pressures.
