Retail sales show consumers under pressure

2014-06-18 17:25

Retail sales on a month-to-month basis recorded no growth from March to April this year, according to data released by Statistics South Africa today.

In the three months to April, retail sales rose by 1.6% compared with the same period last year.

The retail sales numbers show that household financial conditions and consumer confidence remained weak, according to analysis by Nedbank.

“Today’s retail sales data continue to point towards a subdued trend in consumer spending. The Reserve Bank faces the dilemma of striking a balance between the weak economy and rising inflation,” said Nedbank.

May inflation numbers also came out today and were recorded at 6.6%, outside of the Reserve Bank’s 3%-6% inflation band.


“The [Reserve Bank] governor has made it clear that the rate-hiking cycle has begun, but the extent and speed of tightening will be data dependent. The first-quarter GDP data and continuing turmoil in the mining sector decreases the likelihood of an early rate hike,” said Nedbank.

Nedbank has forecast that interest rates may go up late next year after the US starts raising its interest rates.

On an annualised basis, growth in retail sales showed improvement in April and grew by 1.8%, higher than the consensus forecast of 1.6%.

The annual growth was mainly pushed by sales in the textiles, clothing, footwear and leather categories and the food, beverages and tobacco categories.

Consumer spending is likely to remain lacklustre as consumer confidence will still be fragile because of the poor job market, high inflation and debt level, as well as tight lending standards, said Nedbank.

“However, some improvement is likely to be experienced during the second half of the year off a low base and as the strike in the mining sector – which has resulted in household income losses of about R10 billion – is likely to be resolved soon.”

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