JOHANNESBURG: South Africa’s retail sales expanded at a slower rate in January, data showed on Wednesday, as yet another sector of the weakening economy succumbed to rising inflation and the threat of higher lending rates.
Retail sales on a month-on-month basis contracted 0.3 percent in the month after growth of 1.5 percent in December, the first monthly contraction since May. The headline figure for January slowed to 3.1 percent, short of exceptions for a 3.8 percent expansion and well below December growth of 4.1 percent.
“While the weakness was widespread, it was most pronounced in durable goods, suggesting that consumer confidence is slipping,” emerging market analyst at Capital Economics John Ashborne said.
Retail sales had bucked the trend after both manufacturing and mining shrunk in January but showed signs of strain, with consumer inflation forecast by the central bank to spike at 7.8 percent this year starting to weigh. Sales of household furniture and appliances slowed sharply, growing 2.6 percent year-on-year in January from 6 percent in the previous month, while sales of general goods and pharmaceuticals also stuttered.
The South African Reserve Bank’s (SARB) monetary policy committee announces its decision on lending rates on Thursday, and while it is expected to keep rates unchanged it has already hiked by 175 basis points in the last two years. The SARB will be hard-pressed to keep inflation in its upper target range of 6 percent as a severe drought and the falling rand push consumer prices higher.
