Study: Malaysian consumers cut spending as brands urged to show more empathy

The rising cost of living continues to weigh heavily on Malaysians, creating a challenging environment for brands aiming to sustain sales momentum in 2025. While official government data puts inflation at around 1.2%, new research by Ampersand Advisory and InsightzClub paints a more sobering picture of household sentiment. One that goes beyond headline figures and into day-to-day realities.

The July 2025 survey, conducted among 200 Malaysians across different income levels, found that only 19% feel financially comfortable compared to a year ago. The rest are tightening their belts: 31% are struggling to make ends meet, 28% are just managing, and another 31% are “somewhat worried” about their ability to cope. Around one in three say they will only be okay if they make cuts to their spending.

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The findings reveal a clear behavioural shift. Nearly half of respondents (45%) are either dipping into their savings or reducing the amount they save each month. An equal proportion are seeking better-paying jobs, while another 43% have taken on side hustles such as freelance projects, online sales, or ride-hailing work.

Downtrading is also becoming more common. 38% have switched to cheaper brands, 35% have cut back on non-essential purchases, and 33% have reduced their grocery or daily necessities spend. Even sustainability-related choices are being driven by cost, with 34% conserving water, electricity, or fuel use.

Big-ticket purchases are also being put on hold. 69% of households are delaying major buys such as appliances, electronics, or vehicles due to cost pressures. This delay may be contributing to the anticipated growth of Malaysia’s Buy Now, Pay Later (BNPL) sector, which is projected to hit US$2.52 billion in 2025, marking a 15.1% year-on-year increase.

Who should ease the burden?

While a majority (56%) of consumers believe the government is primarily responsible for controlling prices, there is also an expectation that the private sector should step up. 79% expect government subsidies or assistance, and 76% want stricter price controls.

However, one-fourth of the respondents believe companies have a role to play in alleviating cost-of-living pressures, not just through pricing but also through added value and empathy in customer engagement.

This translates to opportunities for brands willing to adapt their marketing and business strategies. Practical measures such as honest communication about price changes, offering smaller pack sizes, adding loyalty perks, free delivery, extended warranties, and flexible payment plans can help maintain relevance and loyalty in a cautious spending climate.

In conversation with A+M, Sandeep Joseph, CEO and co-founder of Ampersand Advisory, said that marketers should not underestimate the role of empathy in sustaining brand relevance. “Empathy and connecting with consumers is an underrated marketing tactic,” he explained. “It’s about reflecting their reality back to them in ways that feel authentic and understanding that they are making trade-offs every day.”

He suggested that brands focus on communication strategies that acknowledge consumer struggles without being patronising. This could mean featuring relatable storytelling in campaigns, using transparent messaging on value and quality, and ensuring promotional offers are genuinely beneficial rather than gimmicky.

Sandeep also noted that Gen Z is a particularly important — yet financially constrained — segment. “They’re health-conscious, working hard, going out less, and trying to make ends meet on starting salaries that haven’t really increased in a decade,” he said.

He added that while Gen Z is often portrayed as a free-spending, experience-driven cohort, the data shows they are making calculated spending decisions. They are willing to splurge on occasional moments of joy, such as entertainment, travel, or wellness experiences, but only when they feel it’s worth the cost.

The study, Mritunjay Kumar, CEO of InsightzClub said, also showed that people clearly feel the government should step in to control prices, seeking more support through subsidies and price controls to ease the strain of rising costs. "Prime Minister Anwar Ibrahim’s recent announcement of RM100 aid, a toll hike freeze, and lower fuel prices reflects these public calls for stronger government intervention. Whether these measures will help to mitigate inflation remains to be seen," he added.

Navigating the next two quarters

The research comes at a time of heightened economic uncertainty. The upcoming Trump tariffs, due to take effect on 1 August 2025, are expected to affect Malaysia’s export sector, which could in turn impact jobs and incomes. While Bank Negara Malaysia projects lower inflation ahead, brands will likely find sustaining demand more difficult in a price-sensitive environment.

“The next two quarters are significant,” Sandeep said. “Marketers and advertisers will need to find creative solutions and display empathy for Malaysian consumers. This means focusing on loyalty not just as a rewards programme but as an emotional connection.”

For Malaysia’s marketing community, the cost-of-living crunch is more than just an economic trend. It is a shift in consumer mindset. The brands that will thrive in this environment are those that innovate with affordability in mind, communicate with honesty, and create value beyond the transaction. In a market where every ringgit counts, empathy might just be the most effective marketing currency of all.

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