KUALA LUMPUR: The nearly RM8 billion cash assistance announced under the Strategic Programme to Empower the People and Economy (PEMERKASA) on Wednesday is expected to boost consumer sentiment and spending, said MIDF Amanah Investment Bank Bhd Research (MIDF Research).

Prime Minister Tan Sri Muhyiddin Yassin announced yesterday that under PEMERKASA, this cash assistance would be paid to recipients affected by the pandemic as well as the lower income group.

"We expect the cash assistance to boost consumer sentiment and spending due to the higher on-year allocation, which is likely to benefit the consumer sector at large," MIDF Research said in a note today.

The research house has upgraded its call for the consumer sector to "positive" from "neutral" previously.

On the government's announcement pertaining to the RM700 million Wage Subsidy Programme 3.0 for additional three months for companies that have to close during the Movement Control Order (MCO), MIDF Research expected the programme to potentially benefit retailers.

MIDF Research also expected further re-opening of economy and easing of controlled movement would benefit the consumer sector.

"We expect the adjustment in standard operating procedures to give more room to boost consumer spending, as consumers who have not been able to physically shop in retail shops may be more encouraged to go out and spend," it said.

The stimulus on top of the easing controlled movement is also anticipated to improve sentiment, particularly in the upcoming Hari Raya celebration in May.

"We also expect the hotel, restaurant and cafe segment to recover with more less movement restrictions," it said.

On the flip side, MIDF Research expected higher input cost may put pressure on food and beverage producers' profitability.

"We think that the food and beverages companies will have to be tactful on pricing as times are still considerably challenging for consumers, rendering limited opportunities to raise prices.

"We are also mindful that input cost for packaging has risen year-on-year but we believe that food and beverage manufacturers are able to manage the higher costs," it said.

-- BERNAMA