After a spending spree in January, South Africans hardly flocked to stores in February.
Retail sales that month fell 0.9% year-on-year, Statistics South Africa (Stats SA) reported on Wednesday. This compares to market expectations of a 1.1% increase. On a seasonally adjusted monthly basis, retail trade fell 0.5% from January.
Moderate demand pressures come as no surprise in an economy with an unemployment rate of over 35% that is also grappling with slowly rising interest rates and consumer inflation close to 6% and expected to boiling for some time in the face of soaring food and fuel prices.
Still, other data sets point to a reasonable start to 2022 for South Africa’s economy, which grew 4.9% last year after contracting 6.4% in 2020. retail sales rose 6.4% last year after contracting 7.1%. % in 2020 and got off to a flying start in January 2022, growing by 7.7% over one year.
So, it could be that February was just a hiccup and March’s reading is stronger. Sales of new vehicles, for example, have been robust, partly reflecting pent-up demand. And the BankservAfrica (Beti) Economic Transactions Index, a measure of economic transactions between South African banks calculated by Economists.co.za, hit a record high in March of 135.9 index points.
“Beti’s numbers are in line with robust new vehicle sales, Absa’s purchasing managers index and other strong economic sectors,” BankservAfrica said.
Other indicators paint a resolutely mixed economic start through 2022. South African manufacturing output rose a meager 0.2% year on year in February and fell 1.1% on a monthly basis.
And domestic retail fuel prices have hit record highs while food inflation remains high, particularly due to Russia’s war in Ukraine. The South African consumer is increasingly in dire straits. In such an environment, expect consumers to think twice before opening their wallets. DM/BM