Retail sales spike in July, beating market expectations

Retail sales showed a strong performance in July, registering 5.6% year-on-year, beating market expectations.

This is up from a softer 1-point-7 percent in June, marking the 17th consecutive month of positive year-on-year growth.

The strength in retail, especially in non-essential categories, reflects improving household purchasing power and balance sheets and less restrictive monetary policy.

The deputy director for distributive trade statistics at Stats SA, Raquel Floris, said five of the seven retail groups recorded a positive month.

“Textiles and clothing, footwear and leather goods increased by10,0% and contributing 1,7 percentage points and general dealers by 3,3% and contributing 1,4 percentage points. Together both groups pushed overall growth by 3,1 percentage points.”

But FNB senior economist Siphamandla Mkhwanazi said a weaker performance by food and beverage retailers and pharmaceuticals could signal consumer belt-tightening on ertain non-essential or high-frequency purchases.

“If sustained, the weakness in food and beverages may point to underlying pressures in lower-income segments, where inflationary effects are more pronounced. That said, the recently publicly announced, above-inflation multi-year wage deals in various sectors should help mitigate these pressures.”

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