/ 17 October 2007

August retail sales at 6,9%

South Africa's retail trade sales picked up again in August, increasing by 6,9% year-on-year, in comparison to July's 4,9% year-on-year rise, according to data released by Statistics SA on Wednesday. Total retail sales at constant 2000 prices reached R24,5-billion in August, up from R24,1-billion in July 2007.

South Africa’s retail trade sales picked up again in August, increasing by 6,9% year-on-year, in comparison to July’s 4,9% year-on-year rise, according to data released by Statistics SA on Wednesday.

Total retail sales at constant 2000 prices reached R24,5-billion in August, up from R24,1-billion in July 2007 and R23-billion in August last year.

Retail trade sales at constant (2000) prices for the three months to August showed an increase of 6,4% compared with the three months to August 2006.

Similarly, retail trade sales at constant (2000) prices for the first eight months of 2007 increased by 7,9% compared with the first eight months of 2006.

“This is lower than the 9,4% growth for the first eight months of 2006 compared with the corresponding eight months of 2005,” Stats SA said.

Retail trade sales at current prices increased 13,3% year-on-year in August to R36,6-billion. The corresponding growth rate for August 2006 was 15,8%.

Retail trade sales at current prices for the three months to August increased by 13,2% compared with the three months to August 2006.

The major contributors to the 13,2% increase were general dealers, where retail trade sales at current prices rose 16,9% to R35,6 billion in the three months to August after the sharp slowdown during July.

All other retailers, which made up 2,9% of total sales, climbed 20,8% to R13,4-billion during the three months while retailers in textiles, clothing, footwear and leather goods reported a 10,6% rise to R17-billion.

Retailers in household furniture, appliances and equipment meanwhile recorded declines in sales compared to the same period last year.

“The higher interest rates have had a profound impact on the ability of consumers to finance these big ticket items,” said Nico Kelder, an economist at Efficient Research.

He said the data for August was stronger than anticipated.

Retail sales were expected to continue to record lower rates of increases, mainly a result of the high base created last year.

“This indicates that the consumer shrugged off the rate hike in August — indicating that the South African Reserve Bank’s (SARB) decision to increase interest rates last week was the correct one,” said Kelder.

But he warned that sustained consumer spending could result in further rate increases this or early next year.

Kelder said it seems that consumers have started to respond to the higher interest rates, but not in the wholesale fashion the SARB might have hoped for but rather in durable goods.

“A positive that the SARB can take from this data is that the implied inflation rate dropped from 6,6% in July to 6% in August,” said Kelder, adding that this may be the first sign of a slow down in inflation. – I-Net Bridge