Food, beverage and tobacco gave retail sales a welcome boost in May. Photo: Reuters
Cape Town - South  Africa’s retail sales rose 1.7 percent year-on-year in May, boosted by food, beverages and tobacco purchases against predictions of a 0.3 percent decline.

Statistics South Africa (Stats SA) on Wednesday said the rise followed an upwardly revised 2 percent gain in April.

The agency said food, beverages and tobacco in specialised stores sales shot up 14.5 percent from 11.1 percent in April. 

It said pharmaceuticals and medical goods, cosmetics and toiletries also surged 0.5 percent compared with 0.2 percent in April while sales in all “other” retailers added 3.2 percent from -5.1 percent last month.

But Stats SA said hardware, paint and glass fell 4 percent from 2.9 percent and general dealers fell 0.2 percent compared with 6 percent in April.

Investec economist Kamilla Kaplan said the performance was an extension of sales dynamics in the year to date, citing the contrast seen in general dealers and sales in the semi-durable goods and durable goods categories, which underperformed compared with the same period last year.

“This would suggest that consumers are diverting spending away from the more discretionary (non-essential) items, as consumer confidence remains depressed, real disposable income growth has contracted and credit extension to households is negative in real terms,” she said.

Stats SA reported that seasonally adjusted retail trade sales increased 0.9 percent month-on-month in May following 0.7 percent in April and 0.5 percent in March.

In May, the three-month rolling seasonally adjusted measure rose to 1.6 percent from 0.1 percent.

Kaplan said the sector was on track to make a positive contribution to second-quarter GDP, after having detracted from first-quarter GDP.

Retail sales in the three months to May increased 1.5percent compared with the three months to May last year.

Read also:  Retail sales: green shoots or short-lived? 

Capital Economics’ Africa economist John Ashbourne said the surge suggested that the recent run of weaker quarter-on-quarter retail sales growth figures was largely the result of disruptions caused by the increased popularity of “Black Friday” sales offers.

“These pushed up spending in November, and then depressed it in the following months,” he said.

“May was the first month in which November did not feature in the quarter-on-quarter comparison.”

Economic data website Trading Economics said the country’s year-on-year retail sales averaged 4.58 percent from 2003 until this year, reaching an all-time high of 15.5 percent in September 2006 and a record low of -6.40 percent in April of 2009.

NKC Research analyst Elize Kruger said the improvement in retail sales was more broad-based, with five of the seven categories contributing positively to growth as opposed to only sales of essential goods.

“With data for two months of (this year’s second quarter) now known, it seems that the sector would be a positive contributor to (the second quarter’s) real GDP growth, which provides a good indication that overall GDP growth could likely be back in positive territory,” she said.

Partner and managing director at Boston Consulting Group, Stefan Salzer, believes the retail industry as a whole is under pressure from the recession. Salzer said consumers, as well as retail companies, would continue to experience challenges over the course of this year.

BUSINESS REPORT ONLINE