South Africa’s retail sales soften in July as tighter monetary impositions restrict consumer purchases

Retail sales in South Africa slowed during the month of July, supporting views that the sector remains under pressure. Also, tighter monetary impositions by the central bank of the country have led to lesser consumer purchases through the period.

South Africa’s retail sales grew 0.8 percent in July from a year earlier‚ compared with a downwardly revised 1.4 percent in June, data released by Statistics South Africa showed Thursday. Economists had expected an uptick from June, which marked a surprisingly steep slowdown from 4.5 percent the month before, but had not expected July’s growth to come in above 2 percent.

Further, compared with a month earlier‚ retail sales rose 0.4 percent in July‚ after a 1.9 percent contraction in June. The year-on-year growth was driven mainly by the textiles‚ clothing and footwear sector, contributing 0.8 percentage points and by general dealers‚ and pharmaceutical retailers‚ contributing 0.5 percentage points each.

Moreover, consumers have been under sustained pressure from higher interest rates‚ tighter lending criteria and rising inflation‚ as a severe drought has driven up food prices and rand weakness earlier this year drove up the prices of imports, reports said.

However, some respite has come in the form of falling fuel prices; the petrol price fell 18c a litre in September and 99c in August, but economists have pointed repeatedly to low consumer confidence levels.