South Africa’s retail sales rose more than expected in the year to March, ending 13 straight months of contraction and suggesting consumer demand is catching up with a broader economic recovery.
A series of interest-rate cuts have helped support consumption, but Wednesday’s upbeat sales data reduced the chances of further rate cuts, analysts said.
Consumption, previously a key driver of growth, had been in decline for the past year as people struggled with heavy debt and rising unemployment after about 900 000 jobs were shed during South Africa’s first recession since 1992.
Retail sales rose by 1% percent year-on-year in March at constant prices, compared with a revised 1,3% contraction in February, Statistics South Africa said.
Sales, however, decreased by 0,6% in the three months to March, compared with the same period a year ago.
Economists polled by Reuters forecast a 0,4% year-on-year increase in March sales.
“It is an encouraging number [and] an indication that consumer confidence is improving on the back of low interest rates and low inflation,” said Nedbank economist Johannes Khosa.
The Reserve Bank cut rates by 550 basis points between December 2008 and March this year, but left them unchanged as expected last week amid signs of a sustained economic recovery and balanced inflation risks.
Reserve Bank Governor Gill Marcus had already signalled a no-change decision last month, when she said there was limited scope for further monetary easing and that rates would be stable for “some time”. — Reuters