Pretoria - South Africa's retail sales rose by 6.1 percent year-on-year in September - a much better than expected outcome predicted by experts in the financial sector.
"This is suggesting that consumption continues to recover, despite a challenging job market and relatively high debt burdens," said Nedbank, in reaction to the figures.
The bank said sales were likely to remain firm in the last quarter of the year, helped by attractive prices and low interest rates.
Statistics South Africa said on Wednesday the 6.1 percent was an improvement from August's 4.6 percent. Retail sales have grown by 6.2 percent in the three months to September, compared with the same period a year ago.
Retail sales growth has been positive since January 2010.
"While the consumption side of the economy is recovering, the production side is still struggling. As a result, and given the subdued inflation outlook, the Reserve Bank's MPC [Monetary Policy Committee] is likely to take the opportunity to stimulate the economy further and help take some of the edge off the strong rand by cutting interest rates by another 50 basis points at tomorrow's meeting," said Nedbank.
The MPC began its two-day meeting today and will announce its decision on rates tomorrow. The repo rate is at 6 percent, while the prime lending rate is 9.5 percent.