Skip to main content

Retail sales robust, but credit downgrade could slow down momentum

| Economic factors

Retail sales growth remained robust in September, but an analyst has warned that a credit downgrade could “derail” the momentum of the sector.

According to data released by Statistics South Africa (Stats SA), the annual growth rate was 5.4% in September, but the month-on-month change from August was down 0.7%.

“Should a local currency credit rating downgrade be triggered before the first half of next year, the sector’s momentum will almost certainly be derailed on even lower consumer and business confidence,” said FNB senior economic analyst Jason Muscat.

He added that tax increases to be announced in the February 2018 budget would also hold back any acceleration in the medium term.

So far, retail has been helped by the rate cut in July. “We suspect that significant retailer discounting has been an additional tailwind,” said Muscat.  

The retail sector is expected to make a “meaningful” contribution to third quarter GDP. This is also a positive for the year’s GDP, he explained.

Investec economist Kamilla Kaplan is of the view that the retail sector's contribution to the quarter’s GDP will only be modest.  Kaplan added that the sector’s activity has been constrained by the modest growth in household consumption expenditure.

All retail categories reported growth, except for hardware, which declined 4.5%. The biggest contributor to the annual sales growth was other retailers, up 19.4% and contributing 2.1 percentage points to growth.

Retailers of textiles, clothing, footware and leather goods grew 8.6% and contributed 1.3 percentage points to annual growth. General dealers were up 3.4% and contributed 1.5 percentage points to the annual growth.

Retailers of food, beverages and tobacco in specialised stores grew by 5%, while pharmaceutical and cosmetic stores grew 2.3%. Household furniture, appliances and equipment grew 5.9%. 

Pin It

Related Articles

Petrol price hike on Wednesday, but some diesel...

By: News24   Petrol will be hiked on Wednesday (03/04/2024), while wholesale diesel prices are mixed.  

SPAR shares tips on how to lighten the financia...

For many, Easter is a time of celebration and tradition, marked by gatherings with loved ones and delicious meals. However, the financial strain brought on by the increased cost of living may require families to adjust their usual celebrations, wh...

Reprieve for consumers at till as prices tick m...

By: Given Majola - IOL Business Consumers got a reprieve at the till this month as the cost of the average household food basket showed a marginal increase.

SA consumers feel the big squeeze: 99% have cha...

According to NIQ, 44% of South African consumers feel they are in a worse financial position this year compared to a year ago.

SA consumers are swapping Easter eggs for house...

By: Dhivana Rajgopaul – IOL Business South African consumers are choosing to prioritise buying household food essentials, instead of spending money on Easter eggs.