Inflation and retail data indicate consumer recovery

Increases in retail and inflation shows South African consumers are slowly recovering, which points to a positive outlook for the South African economy, economists told the Mail & Guardian on Wednesday.

According to data released by Statistics SA, retail sales accelerated by 7.1% year on year in August from 3% in July, while inflation weighed in at 5.7% year on year in September compared to 5.3% in August.

Household furniture, appliances and equipment retailers were the biggest influence on stronger retail figures after seeing a rise in sales of 14.3%.

Higher food prices coupled with minor surges in housing valuations and increases in the petrol price were seen as the main reasons for the jump in inflation figures.

Nevertheless, while inflation was higher than forecasters initially predicted and is skirting the South African Reserve Bank’s (SARB) inflationary target band, the jump in consumer activity is a good sign for the South African economy.


“There is a lot of volatility in these types of figures but the bottom line is that consumers are coming back to the party which in essence means good things for the South African economy. A consumer slowly coming out of their shell after tough economic times will lead to a knock on effect in other sectors,” Efficient Group chief economist Dawie Roodt told M&G.

Roodt’s comments will be welcomed in tough economic times in 2011 that has seen an increase in national unemployment and downward revisions of economic growth.

The figures must be taken within the context of uncertain global economic times along with an increase in consumer pressures, according to Chris Gilmour of Absa Investments.

“It is safe to say that consumer forces are alive and that rises in electricity and a weaker rand has left them relatively unscathed. However, we must remember that this growth is not across the retail board. You will find far more growth in the lower and upper segments of the industry. Accordingly, the broad middle of our economy is gently being squeezed,” Gilmour said.

Subscribe to the M&G

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years, and we’ve survived right from day one thanks to the support of readers who value fiercely independent journalism that is beholden to no-one. To help us continue for another 35 future years with the same proud values, please consider taking out a subscription.

Related stories

South Africa gets $4.3bn IMF loan. In return, the country must reform

The loan, which is repayable over five years at an interest rate of 1.1%, comes with various self-imposed conditions such cutting the public wage bill and rationalising support to the state-owned entities

SA’s economy expected to contract by 7.2% in 2020

The economy is in a depressed state, and Finance Minister Tito Mboweni has called for cautious use of the country’s finances to avert plunging into a sovereign debt crisis

Small firms adapt or die in lockdown

The harmful economic effect of the pandemic has seen small businesses lose out, but others have been able to survive by changing to suit the times

Reserve Bank cuts repo rate by 50 basis points

The Monetary Policy Committee has cut the repurchase rate by a further 50 basis points, after a two consecutive cuts of 100 basis points earlier this year

This time, the IMF is not to be feared

The International Monetary Fund’s emergency funding is cheaper than other options and is low risk. The Reserve Bank creating money to finance government debt is a better option

Mogajane: SA will stay on growth path

Government’s response to the coronavirus is unlikely to counteract the expected sharp decline of the country’s gross domestic product
Advertising

The PPE scandal that the Treasury hasn’t touched

Many government officials have been talking tough about dealing with rampant corruption in PPE procurement but the majority won't even release names of who has benefited from the R10-billion spend

ANC still at odds over how to tackle leaders facing...

The ANC’s top six has been mandated to work closely with its integrity committee to tackle claims of corruption against senior party members
Advertising

press releases

Loading latest Press Releases…

The best local and international journalism

handpicked and in your inbox every weekday