September retail sales growth slows to 2%

South Africa’s retail sales growth slowed to 2% year-on-year in September at constant prices, data showed, but analysts said this was likely not enough to hold off another interest rate hike in December.

Retail sales growth slowed from a downwardly revised 6,6% in August, Statistics South Africa said on Wednesday.

In the three months to the end of September, retail sales — the main gauge for consumer demand — increased by 4,6% compared to the same period the previous year, also at constant prices.

The consumer spending was showing signs of slowdown in response to tighter monetary policy but more data was needed to show whether the slow-down would continue, analysts said.

”It [retail figure] is a weak number, it is only one month but it indicates that consumer spending is lower, but we need more data before we can confirm that,” said Nico Kelder, economist at Efficient Group.

The repo rate has increased by 350 basis points since June last year to 10,5%.

The slowdown in retail sales was most probably not enough on its own to keep another interest rate hike at bay when the central bank meets on December 5 and 6, economists said.

”I think the South African Reserve Bank will look past these numbers, especially after the governor’s statements earlier today,” said Absa Capital economist Monale Ratsoma.

”We see a continuation in the [interest rates] hike trend, based on the direction that inflation is taking.”

Reserve Bank Governor Tito Mboweni told Parliament’s finance committee on Wednesday that if it was up to him alone, he would raise interest rates again in December.

The rand was steady at 6,6660 against the dollar at 10.01am GMT and the 2015 bond stood at 8,235% after opening at 8,2%. – Reuters

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