September retail sales preview

September's retail sales reports from both the US and South Africa have been highly anticipated as they offer valuable insights into the impact of rising inflation and interest rates on consumer purchasing power. In a recent interview on CNBC Africa, Annabel Bishop, Chief Economist at Investec, shared her views on the upcoming retail sales data and shed light on the key factors influencing consumer spending patterns. Bishop highlighted the potential challenges facing the retail sector in South Africa, stating that low-shitting has had a noticeable impact on sales, particularly in the food and grocery segment. She mentioned that September, being a typically strong month for sales, might see a slight contraction due to these factors. However, Bishop reassured that the contraction is expected to be minor, around zero percent, and not indicative of a significant downturn in the retail sector. Despite concerns about low-shitting and consumer debt levels, some companies have reported resilient sales figures, leading to a discrepancy in the signals between corporate results and economic indicators. Bishop explained that while the third quarter overall is not expected to show a contraction, temporary factors such as low-shitting and consumer indebtedness could dampen sales in September. She anticipated a potential rebound in October and November as consumers gear up for the festive season. The shift in consumer spending habits was also a topic of discussion, with Bishop noting a move towards spending on experiences such as hospitality and entertainment rather than traditional retail purchases. This trend has been supported by a resurgence in in-person activities following the easing of lockdown restrictions, indicating a preference for brick-and-mortar stores over online shopping. Regarding the impact of interest rate hikes on consumer spending, Bishop expressed concern about a potential lag effect, with the full impact expected to be felt in the first quarter of next year. She warned that increased borrowing costs and inflation could lead to a more significant slowdown in consumer expenditure in early 2022. In conclusion, while challenges persist in the retail sector, the outlook for the upcoming festive season remains optimistic. Bishop emphasized the importance of monitoring consumer confidence, financial vulnerability, and shifting spending patterns to gauge the resilience of the retail industry amidst evolving economic conditions. As September's retail sales data is released, analysts and investors will be closely watching for any signals of consumer sentiment and spending trends to assess the health of the retail sector moving forward.