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Economists react to slowing retail sales

Johannesburg - Growth in South Africa's retail sales slowed to 2.8 percent year-on-year in March from a revised 3.9 percent in February, Statistics South Africa said on Wednesday.

On a month-on-month basis, sales were down by 0.9 percent in March but increased by 3 percent in the three months to the end of March compared with the same period in the previous year.

File photo: Simphiwe Mbokazi. Credit: Independent Newspapers

ANALYST COMMENT

PETER ATTARD MONTALTO, EMERGING MARKET ANALYST, NOMURA INTERNATIONAL

“Retail sales surprised us and the market to the upside slightly.

“The move likely reflects the fact that large, real-wage increases are offsetting the effect of slowing credit growth more than we first thought, as well as the fact that sentiment was still OK in March.

“We expect sales to slow back to lower, though still positive growth rates, through the first quarter.

“The data here though provides no stimulus for the Monetary Policy Committee (MPC) to be jumped out of their current comfort zone in rates at this meeting or the next.”

MARKET REACTION

The rand was at 9.280 against the dollar at 13:16 SA time from 9.288 before the data was released at 13:00 SA time.

The yield on the 2026 benchmark bond was unchanged at 6.845 percent.

BACKGROUND

- Growth in retail sales has remained hesitant, with heavily indebted households reluctant to spend despite interest rates being at four-decade lows.

- Growth in household spending, historically a key driver of the economy, slowed to 2.4 percent in the fourth quarter of 2012, constrained by a slow increase in disposable incomes and rising inflation, the Reserve Bank said in its latest quarterly bulletin. Households' debt to disposable income remains at near-record high levels at around 76 percent in the Q4. - Reuters

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