South African retail sales growth accelerated to 12,3% year-on-year in November at constant prices, backing the case for a rate rise in February, official data showed on Wednesday.
Retail sales — the main measure of consumer demand — rose by a downwardly revised 8.7 percent in October, while sales growth for the three months to November climbed to 11.5 percent, also at constant prices.
Consumer demand has been the main driver of growth in Africa’s biggest economy over the past couple of years but has also added to inflationary pressures, and has so far shown few signs of slowing despite higher interest rates.
South Africa’s central bank has raised its key repo rate by 200 basis points to 9% in four stages since June to tame inflation.
Analysts said the robust sales in November reinforced the chances of another hike in rates when the bank’s monetary policy committee meets in February.
”Retail sales in November were pretty buoyant, indicating more ammunition for the Reserve Bank to hike rates again next month,” Brait Merchant Bank economist Colen Garrow said.
”It indicates that rate hikes are taking a long time to have any curb on retail sales growth, so we can expect another hike,” he said.
Market reaction to the data was muted with the rand currency little changed at 7,2630 to the dollar at 9.30am GMT. The benchmark R157 bond was down two basis points at 7,975%.
Central bank governor Tito Mboweni has repeatedly warned consumers to curb spending and has said demand would be closely monitored when deciding on interest rate adjustments.
Credit growth was running near record levels at 26,77% in November, while household debt is at a record 73% of disposable income. – Reuters