JOHANNESBURG - The hike in value-added tax (VAT) and surge in fuel prices has cut through retail sales in South Africa, dropping them 1.2percent in April, compared to March - well beyond the market expectation.
Statistics South Africa (StatsSA) said yesterday that the general retailers’ category fell by 1percent year-on-year, after increasing by 2.4percent on a yearly basis in March.
Sales in the furniture and household equipment sectors eased to 11percent from 17.6percent. Foods, beverages and tobacco fell 5.5percent while textiles, clothing, footwear and leather goods followed with -0.5percent from 10.1percent in April.
FNB senior economic analyst Jason Muscat said the sharp deceleration suggests that consumers may well have front-loaded purchases ahead of the April implementation of the VAT hike.
"We wait to see if there is a normalisation in buying patterns in the May print, but evidence seems to be mounting that household consumption may not be holding up as well as we had expected in 2018,” Muscat said. StatsSA said the retail sales, however, rose a modest 0.5percent year-on-year.
The data sent retail stocks down on the JSE, with Truworths falling 3.28percent to R81, while The Foschini Group declined 1.61percent to R185.88 and Mr Price 1.9percent to R273.33.
NKC African Economics economist Elize Kruger said higher international oil prices would most likely constrain the average household in coming months.
“Although some sectors held up, overall retail sales slumped in April, clearly reflecting many headwinds that started to gather and are now impacting negatively on consumer spending,” Kruger said.
Meanwhile, the BankservAfrica Economic Transaction Index for May declined by 2percent between May and April.
Shergeran Naidoo, the head of stakeholder relations at BankservAfrica said: “This is the largest decline since September 2013, and is a clear showing of the weakened South African economy.”