- Retail sales data for July surprised on the downside, recording a year-on-year contraction of 0.8%, and a month-on-month contraction of 11.2%.
- According to Stats SA, this is the biggest monthly fall in sales since April 2020, when the country was placed under lockdown level 5 restrictions.
- The large decline is largely due to the unrest which hit parts of Gauteng and Kwa-Zulu Natal.
July retail sales fell by 11.2%, from June, largely due to the unrest in Gauteng and Kwa-Zulu Natal during the month.
According to Stats SA, this is the biggest monthly fall in sales since April 2020, when the country was placed under lockdown level 5 restrictions. Sales at the time fell 50.4% on a year-on-year (y/y) basis and 50.7% on a month-on-month basis.
On a y/y basis, retail sales contracted 0.8%. However, economists from the Bureau for Economic Research had pencilled in growth of 3.3%.
Razia Khan, managing director and chief economist of Standard Chartered Bank's Africa and Middle East operations, noted that retail sales surprised on the downside. "Few would have expected a contraction in y/y terms, given that the base in 2020 was still impacted by some lockdown restrictions and a severe wave of [Covid-19] in the winter months," she said in a note.
The decline is largely linked to the unrest.
In a separate note, Investec economist Kamilla Kaplan said that the civil unrest was expected to negatively impact retail sales as certain stores were subject to looting or arson and many retailers - even those in unaffected areas - closed as a precautionary measure.
"In July, the country experienced the third wave of infections which will have deterred some shoppers while the lockdown restrictions, and specifically the alcohol ban will have had an impact on sales," said Kaplan.
According to Stats SA, the largest y/y contractions were recorded for the household furniture, appliances and equipment category at 10.2%, as well as hardware, paint and glass - down 6.2%. Food, beverages and tobacco products also declined 4.1%.
Khan said there was a mixed picture in terms of performance of different categories as clothing and footwear saw double digit growth - of 10.9%. Pharmaceuticals, medical goods and cosmetic goods lifted 1.5%.
Raquel Floris, deputy director for distributive trade statistics at Stats SA, noted that a new sample was used for the retail sales. The sample was drawn in April 2021, from a business register of enterprises with an annual turnover of at least R1.16 million and which are required to register with the South African Revenue Service for value added tax.