Consumers under pressure in South Africa – with relief still a while away

 ·17 Apr 2024

Retail trade sales in South Africa have declined, with economists highlighting the challenges facing the South African consumer.

According to Stat SA, retail trade sales, measured in real terms (constant 2019 prices), decreased by 0.8% year-on-year.

The main negative contributor to this decrease was retailers in textiles, clothing, footwear and leather goods (-6.8% and contributing -1.1 percentage points).

Of the seven sectors surveyed, four recorded positive contributions to the overall outcome on a three-month basis (up 0.5%), with general dealers also showing the largest contribution as consumers focussed on necessities in a tough environment.

Source: Stats SA

Investec Chief Economist Annabel Bishop said that inflation, which decreased from 5.6% in February to 5.3% in March, has a major effect on consumer affordability.

The South African Reserve Bank (SARB) recently reaffirmed its battle to combat high inflation and will only cut interest rates when CPI inflation returns to around 4.5% y/y.

“This is increasingly looking like an interest rate cut will only materialise in November for SA, instead of September, as CPI inflation is only likely to be at 4.5% for one month in September, while the inflation print is also delivered a month late, in October,” said Bishop.

“Indeed, there is a risk of no interest rate cut this year.”


Siphamandla Mkhwanazi, FNB Senior Economist, said that retail volumes reflect a subdued consumer demand environment, which should continue in the near term.

“Furthermore, the prevailing tight lending standards and high debt service cost environment should keep credit growth relatively contained, both in the bank and non-bank sectors, and thus provide less support to consumption,” said Mkhwanazi.

Nevertheless, there is some hope for the medium- to longer-term outlook.

“Consumers should benefit from the slowing inflation trend, positive employment gains, and the extension of the Social Relief of Distress (SRD) grant.”

“In addition, the contemplated, albeit modest, interest rate cutting cycle should help support spending on discretionary items.”

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