Stats SA said household furniture and appliances, pharmaceuticals and medical goods, food and beverages, and general dealers all recorded a rise in sales, but this was not enough to lift overall retail growth into positive territory. Picture Leon Lestrade/Independent Newspapers.
Retail activity in South Africa is expected to remain constrained after sales fell for the second month in February as elevated inflation continued to affect consumers’ disposable incomes.
Statistics South Africa (Stats SA) yesterday said retail sales declined by 0.8% year-on-year in February, marking the second consecutive month of decreases in retail activity, following a 2% decline in January.
Stats SA’s deputy director for distributive trade statistics, Raquel Floris, said three of the seven retail groups registered a fall in sales in February, with the clothing category being the largest negative contributor to growth.
Floris said the retail print experienced significant drops in sales of textiles, clothing, footwear and leather goods, and all other retailers as it fell by 6.8% during the month.
“Hardware painting, glass, and the miscellaneous group referred to as all other retailers also experienced weaker sales,” Floris said.
"On the positive side, household furniture and appliances, pharmaceuticals and medical goods, food and beverages, and general dealers all recorded a rise in sales, but this was not enough to lift overall retail growth into positive territory. Household furniture and appliances registered the largest increase, rising by 3.6% year-on-year.“
On a month-on-month basis, seasonally adjusted retail sales increased by 0.4% in February following month-on-month decline of 3.2% in January and 1.4% growth in December 2023.
FNB senior economist Siphamandla Mkhwanazi said retail volumes continued to reflect a subdued consumer demand environment.
“We expect this to persist in the near term, driven by sticky inflation, high interest rates and depressed consumer confidence,” he said.
“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. That said, the medium- to longer-term outlook is slightly brighter.”
However, consumers are expected to slightly benefit from the slowing inflation trend, positive employment gains, and the extension of the Social Relief of Distress (SRD) grant.
Over the three month period to the end of February, retail sales were 0.5% lower compared with the previous three months.
Investec chief economist Annabel Bishop said consumers were battling for recovery from overspending over the festive season with the real impact of elevated inflation reflecting in the plunge in February.
Bishop said consumers were focused on necessities in a tough environment.
“Consumers (are) financially constrained, and still typically battling with the extra spend over the festive season,” she said.
“Inflation is having a key effect on consumer affordability in South Africa, and the South Africa Reserve Bank recently reaffirmed its resolve to continue to combat high inflationary pressure in South Africa, stating that interest rates will only be cut once inflation achieves, and then remains around 4.5% year-on-year.”
Anthony Modisane, senior equity sales trader at Absa Corporate and Investment Banking, told “Business Report” that “there was initial excitement over the post festive season trading updates” by SA retailers that had “sparked some trading activity, particularly in the apparel space” in some retail stocks on the JSE.
Mr Price and Truworths had been the best performers in the apparel space gaining 10.8% and 7.1% respectively in the first quarter of the current year on the JSE.
“In the food and drug retail space, Shoprite continues to be the darling in terms of food retailers and delivered another set of solid results. But it did feel like investors were largely overweight in the name and thus you saw a muted response to the results,” he said.
BUSINESS REPORT