Retail sales grow 2.2% year-on-year

Wednesday, August 17, 2011

Pretoria - Retail trade sales increased by 2.2% year-on-year in June from a revised 0.2% in May, Statistics South Africa (Stats SA) said.

According to Stats SA, the highest annual growth rate was recorded for retailers in pharmaceutical and medical goods, cosmetics and toiletries, followed by retailers in household furniture, appliances and equipment, and general dealers.

Retail trade sales for the second quarter of the year showed an increase of 4.1% compared with the second quarter of 2010. General dealers - followed by retailers in textiles, clothing, footwear and leather goods - were the largest contributors to the 4.1% increase.

"Growth in retail sales is likely to lose some momentum during the second half of the year, as the base effect diminishes. Furthermore, the support from income growth is likely to be partly offset by fragile consumer confidence on the back of high debt levels, the weak job market and increasing cost pressure from administered goods and services," Nedbank economists said on Wednesday.

The numbers of the second quarter were also evidence that economic growth has lost some momentum and that there's little demand pressure on prices.

"The downside risks to the growth outlook suggest that manufacturers, wholesalers and retailers will struggle to pass the full extent of the earlier hike in food, fuel and power costs onto consumers. These deflationary forces may convince the Reserve Bank to keep interest rates at current low levels for even longer than the market currently anticipates," said Nedbank.

The first rate hike is expected in May 2012.

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