Shoppers’ buying power continued to decelerate in January as retail sales shrank more than expected on tighter lockdown restrictions. Photographer: Nadine Hutton/Bloomberg
Shoppers’ buying power continued to decelerate in January as retail sales shrank more than expected on tighter lockdown restrictions. Photographer: Nadine Hutton/Bloomberg

Retail sales continue 10-month downward spiral

By Siphelele Dludla Time of article published Mar 18, 2021

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JOHANNESBURG - SHOPPERS’ buying power continued to decelerate in January as retail sales shrank more than expected on tighter lockdown restrictions.

Data from Statistics South Africa (StatsSA) yesterday showed that retail trade sales fell 3.5 percent in January from a year ago, following a downwardly revised 1.2 percent slump in December.

This was the 10th successive monthly decline in retail activity, and worse than market expectations of a 2.7 percent decline.

StatsSA said the main negative contributors to the print were food, beverages and tobacco in specialised as well as general dealers.

On a month-to-month basis, seasonally adjusted retail sales fell 1.6 percent compared to December.

StatsSA’s deputy director for distributive trade statistics, Raquel Floris, said that three of the seven categories in retail categories recorded a decline in sales.

“Stores specialising in food and beverages had the biggest negative impact on overall growth, decreasing by 33.6 percent year-on-year,” Floris said.

“General dealers, which includes supermarkets, were the second-biggest negative contributor, declining by 6 percent.”

In the three months ended in January, seasonally adjusted retail trade sales increased by 0.9 percent compared to the previous quarter.

The four retail categories of hardware, paint and glass, however, jumped 25.3 percent from a year before.

Anchor Capital’s Stephán Engelbrecht said the alcohol ban had weighed on retail activity in January.

“Ignoring the effects of the alcohol ban, these retail sales numbers paint a picture of a South African consumer that may be in a far better position than originally feared,” Engelbrecht said.

“We believe these retail categories should rebound in the coming months as the alcohol ban was phased out since the beginning of February.”

Further decline in retail activity has cemented observations that the economy began the year on a contractionary level after manufacturing output contracted 3.4 percent and mining output declined sharply by 6.2 percent in January.

Investec economist Lara Hodes said consumers continued to face financial uncertainty, with real average and overall salaries paid contracting in January.

Hodes said the gross domestic product recovery would be protracted under prevailing economic conditions, specifically the heightened rotational loadshedding.

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BUSINESS REPORT

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