South Africa’s retail sales fell 4,6% year-on-year in July, official data showed on Tuesday, pointing to continued pressure on consumer spending from previous interest-rate increases.
Statistics South Africa said the annual drop in sales followed a 1,5% fall in June, bringing to 3,4% the annualised decline for the past three months.
Year-on-year sales have dropped for three consecutive months.
Consumer spending has cooled sharply in 2008, weighed down by a series of interest -ate hikes since June 2006 as the central bank tried to tame inflation.
The repo rate rose five percentage points over two years, but was left steady at 12 % last month partly because of concern about easing demand.
Analysts said the data showed consumers were struggling and that there was little scope for further monetary policy tightening.
”It tells the story of the pressure on the consumer,” Nedbank economist Nicky Weimar said.
”We’ve seen it in the credit numbers, we’ve seen it in the defaults in the banking system and that’s really the combined effect of high prices, high interest rates and fairly high levels of debt.”
South Africa’s central bank has been caught between record high consumer inflation and slowing demand, highlighted by tumbling new vehicle and falling retail sales.
High international oil and food prices have continued to drive up inflation, although the outlook is better for 2009.
”It [retail sales data] does indicate that we probably are very close to the [interest rates] turning cycle. In fact we believe that we probably are [there],” Weimar said. — Reuters