KUALA LUMPUR, Sept. 4 -- Malaysia's retail industry shrank by 3 per cent in the second quarter of 2025, signalling that households are spending less even as the wider economy continues to grow, according to the latest Malaysia Retail Industry Report.

The drop was sharper than the industry's earlier projection of a 1 per cent fall, showing how quickly consumer confidence has weakened.

The report authored by Retail Group Malaysia said rising living costs have forced Malaysian families to cut back on discretionary purchases, with more of their monthly budgets channelled towards essentials such as groceries, fuel and utilities.

Shoppers in urban centres, who face higher rents and transport expenses, are especially cautious about spending o...