Boost for retail in South Africa

 ·15 May 2024

Retail sales in South Africa have beaten market expectations, and there are glimmers of hope for the medium to long term.

According to Stats SA, retail trade sales increased from a decline of 0.7% in February to an expansion of 2.3% in March, which FNB Senior Economist Siphamandla Mkhwanazi linked to improved holiday-related consumer shopping activity.

The outcome was better than the market expectations of a mild expansion of 0.4%.

On a monthly basis, volumes jumped from an expansion of 1.0% in February to 1.4% in March.

That said, the data shows that volumes declined by 0.9% quarter-on-quarter, implying that the retail industry.

Nevertheless, this data means that volumes declined by 0.9% q/q in 1Q24, implying that the retail industry will detract from the quarterly GDP growth figure, joining the latest manufacturing and mining data.

Source: Stats SA

Four out of seven retail categories recorded an increase in annual volumes, namely general dealers (up 6.4%).

However, hardware volume sales saw the 11th straight month of declines as consumers continued to focus on basic necessities instead of home improvements.

Source: Stats SA


Siphamandla Mkhwanazi, FNB Senior Economist

“Retail volumes continue to reflect a subdued consumer demand environment, weighed on by sticky inflation, high interest rates and depressed consumer confidence,” said Mkhwanazi.

“In addition, the prevailing tight lending standards, in the face of elevated debt service costs and credit defaults, should keep credit growth relatively contained, further limiting consumers’ ability to fund purchases.”

However, he said that there are some faint signs of hope for the medium to longer term due to the continued slowdown in inflation and modest job gains.

“As such, we (FNB) expect household consumption expenditure to lift from 0.6% in 2023 to 1.2% in 2024 and remain contained at around 1.5% in the outer years.”

Read: The one province in South Africa with more people unemployed than working – and a second fast approaching

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