SA retail trade sales down 1.4% y/y in May

Retail sales volumes declined by 1.4 per cent year on year in May, from a downwardly revised decline of 1.8 per cent in the previous month. Once again, this outcome was worse than Reuters consensus expectation of -1.1 per cent and marks a sixth consecutive month of annual decline in sales volumes. Joining CNBC Africa to unpack this further is Siobhan Redford, Economist, RMB.

Thu, 20 Jul 2023 08:23:05 GMT

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Retail sales volumes in South Africa declined by 1.4 per cent year on year in May, worse than expectations, marking the sixth consecutive month of annual decline.
Certain sub-sectors like clothing, textiles, footwear, and leather goods saw significant growth, attributed to consumers returning to normal activities and preparing for winter.
Retailers like Pick n Pay have aimed to shield consumers from high inflation by keeping internal inflation below CPI, supporting consumer affordability and economic viability.

South Africa's retail sector continues to face challenges as retail sales volumes declined by 1.4 per cent year on year in May, marking a sixth consecutive month of annual decline. The data, worse than Reuters' consensus expectation of -1.1 per cent, reflects the ongoing economic pressures in the country. Siobhan Redford, Economist at RMB, joined CNBC Africa to analyze the impact of these declining sales figures. Redford highlighted the struggle of retailers with issues like load shedding, which increase their costs, and the impact of higher interest rates on consumer spending. Despite the overall decline, there were some bright spots in certain sub-sectors, such as clothing, textiles, footwear, and leather goods, which saw a significant increase of 10.3 percent year on year. This growth can be attributed to consumers gradually returning to normal activities, restocking their wardrobes, and preparing for winter. The contrasting performance of different sectors indicates the varied impact of economic challenges on retailers. Redford noted that while clothing and footwear are typically considered discretionary purchases, they continue to show growth, suggesting evolving consumer behavior and preferences. Companies like Pick n Pay have played a role in shielding consumers from the worst effects of inflation by keeping internal inflation below CPI. This strategy aims to maintain consumer affordability and support economic viability for retailers. Looking ahead, Redford expressed caution about expecting an immediate improvement in retail sales. While some cost pressures like fuel prices are easing, food price inflation remains high, impacting consumers' purchasing power. Additionally, the rapid increase in interest rates poses a challenge to retailers as consumer spending on discretionary items is likely to remain subdued. Despite expectations of moderation in inflation, the retail sector is likely to continue facing difficulties in the near term. The sector's performance will be closely tied to broader economic conditions and consumer confidence in South Africa.