By Siphamandla Mkhwanazi
Retail sales growth decelerated to 0.9% y/y in September, down from a revised 3.3% in August (revised from 3.2%). While this marks the seventh consecutive month of expansion, it fell short of the 2.7% increase expected by Reuters consensus. On a month-on-month basis, volumes fell by 0.8%, down from a 0.6% increase in August. Nevertheless, average growth over the quarter means that the retail industry will be a boost to GDP growth in 3Q24.
Importantly, although this month's print coincides with the introduction of the two-pot retirement system, it does not yet give a complete picture of consumer behaviour, given the administrative lags in settling withdrawals.
Retail sales outlet performance
Four out of the seven categories recorded a slide in annual volumes. Hardware retailers recorded the largest decline, at -6.0% y/y, detracting 0.5ppts to the headline number. This was followed by clothing and footwear retailers, with -5.5%, and -0.9ppts. Food and beverage outlets as well as other retailers also saw diminished volume sales, at -2.7% and -1.8%, respectively. The general dealer category was largely responsible for the overall expansion, at 4.5% y/y, contributing 2.1ppts to the headline number, supported by household furniture sales with a robust 14.6% growth, adding a further 0.6ppts.
Outlook
Year-to-date, retail sales have increased by 1.3% compared to the same period last year, indicating a gradual improvement in the consumer environment. In the short term, the introduction of the two-pot retirement system could provide temporary relief to financially strained consumers, potentially boosting shopping activity. In addition, as inflation subsides and interest rates gradually decline, consumers can expect to see increased discretionary income, supporting their spending. Furthermore, the easing of domestic political uncertainty should contribute to stronger asset prices, bolstering consumer balance sheets.
