Retail activity in South Africa is expected to continue surging as consumers get more disposable income from the interest rates reprieve offered by the SA Reserve Bank (SARB) and
Data from Statistics South Africa (Stats SA) on Wednesday showed that retail sales advanced by 7.7% over a year in November 2024, following a downwardly revised 6.2% rise in October.
This marked the ninth consecutive month of growth in retail activity and the strongest since July 2022, surpassing market forecasts of a 5.5% increase.
Excluding the disruptions caused by Covid-19 and the July 2021 riots to the data, this marks the strongest print in approximately 14 years (since June 2010).
Stats SA said the uptick in shopping activity was broad-based across most retailers as six of the seven categories included in the retail basket increased when compared to the same period last year, led by general dealers who saw an impressive 11.9% increase.
This was followed by clothing and footwear as well as household furniture sales, which saw a 9.5% and 9.4% increase in November.
Food and beverages increased by 3.8%, and pharmaceuticals by 3.7%. All other retailers increased by 0.7%.
By contrast, hardware retailers recorded a further decline of 4.3% in November.
On a seasonally adjusted monthly basis, Stats SA said retail trade rose by 0.8% in November, after a 1.6% increase in October.
Retail trade sales increased by 5.1% in the three months ended November 2024 compared to the same period a year ago.
Year-to-date, retail sales have increased by 2.4% compared to the same period last year, the highest level since 2019.
“This reflects a gradual improvement in the consumer environment. We expect this momentum to continue into 2025, supported by a recovery in household incomes, as wages accelerate and inflation abates; lower borrowing costs; improved domestic political risk and consumer sentiment,” said FNB economist, Siphamandla Mkhwanazi.
“These factors should contribute to stronger asset prices, bolstering consumer balance sheets and further supporting retail sales growth.”
According to the Bureau for Economic Research’s retail trade sector survey results for the fourth quarter of 2024, confidence amongst textiles, clothing and footwear retailers was at the highest level since the third quarter of 2007, “surging from 34% to 76% and making semi-durable retailers the most optimistic group” during the quarter.
The fourth quarter is seasonally significant for retailers with Black Friday and festive season shopping boosting sales.
According to BankservAfrica their recorded in-store card transactions were up 10% on Black Friday (29th November) when compared to the same period last year, while their recorded online shopping volumes rose by 6% year-on-year.
Dr Elna Moolman, Standard Bank Group Head of South Africa Macroeconomic Research, said the extremely strong retail sales for November were probably supported by a range of factors.
“Firstly, the Reserve Bank implemented interest rate relief. Secondly, inflation was extremely low, with CPI increasing less than 3% on a year-on-year basis in November, and in the retail sales data, prices increased even less than that,” she said.
“Thirdly, individuals received payouts from the withdrawal of some of their retirement benefits after the implementation of the two-part retirement reform in September last year. Our data shows that these payouts peaked in the second half of October, and this would mean that more funds were available in November to increase spending.
“We remain constructive about the outlook for consumers, which we assume will be supported by persistently low inflation and further interest rate relief from the Reserve Bank.”
BUSINESS REPORT