South African retail sales fell by 0,5% year-on-year in December at constant prices, compared with a revised decline of 0,2% in November, Statistics South Africa said on Wednesday.
In the three months to the end of December, retail sales — the main measure for consumer demand — increased by 0,3% compared to the same period the previous year, also at constant prices.
Total 2007 retail sales were reported at a lower 5,1% from the 9,6% recorded in 2006. This is the lowest annual rate in three years.
Sales of R33,632-billion were recorded in December from the revised R26,701-billion recorded in November.
Total sales for 2007 were recorded at R303,793-billion from the R289,031-billion in 2006.
This further moderation in y/y growth provides further confirmation of slowing consumer spending on the back of rising inflationary pressures, high debt levels and the high interest rates. It indicates that consumer sales are heading into a recession, following manufacturing and car sales.
A recession is technically confirmed by two consecutive quarters of negative GDP growth. It is normal in a business cycle and generally lasts for six to 18 months. Interest rates usually fall in recessionary times to stimulate an economy.
As it stands the December rate is the lowest level in 80 months, with the previous lowest being the -1% recorded in January 2001.
It confirms concerns raised by some analysts that SA is heading into a consumer recession on a real basis.
The weak sales data, coupled with January’s poor vehicle sales figures of a 10,3% y/y decline, add more pressure on the central bank for an unchanged rate decision and possibly a decrease later in the year.
Stats SA also reported on Wednesday that retail trade sales at constant 2000 prices, for the fourth quarter of 2007, showed an increase of 0,3% compared with the fourth quarter of 2006.
For 2005, retail trade sales were recorded at 6,7% at constant prices, but were at 9,7% in 2004. Lower growth of 4,9% and 2,3% was recorded in 2003 and 2002. ‒ Reuters, I-Net Bridge