South African retail sales growth slowed to 0,2% year-on-year in November, the lowest in four years, as higher interest rates put a dampener on consumer spending, official data showed on Wednesday.
Statistics South Africa said sales growth slowed from an upwardly revised 1,9% in October, while in the three months to the end of November, sales increased by 1,2%.
Higher interest rates and stricter laws for accessing credit pinched consumer pockets and supported the case for the central bank to leave rates on hold on January 31.
”The November numbers have been affected by high interest rates, and the National Credit Act which seem to have stymied consumer demand,” said Colen Garrow, economist at Brait Merchant Bank.
”It’s painting a picture of slowing down of consumption in the economy, and it’s probably ammunition for the Reserve Bank to leave rates unchanged. The economy is probably cooling down more than anticipated,” he said.
The central bank has increased the key repo rate by 400 basis points to 11% since June 2006, to tame inflationary pressures, partly fuelled by rampant consumer spending.
The rand weakened sharply shortly after the data, as market players anticipated that the central bank might not raise rates. At 9.20am GMT, it stood at 6,9075 to the dollar, after falling to 6,9350, over 1% weaker than its last New York close.
Consumer demand has been the main growth driver over the past couple of years. – Reuters