SA retail sales don’t paint a rosy picture

THE HIKE IN value-added tax (VAT) and surge in fuel prices has cut through retail sales in South Africa, dropping them 1.2 percent in April, compared to March – well beyond the market expectation.

Statistics South Africa (StatsSA) said yesterday that the general retailers’ category fell by 1 percent year-on-year, after increasing by 2.4 percent on a yearly basis in March.

Sales in the furniture and household equipment sectors eased to 11 percent from 17.6 percent. Foods, beverages and tobacco fell 5.5 percent while textiles, clothing, footwear and leather goods followed with -0.5 percent from 10.1 percent 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 0.5 percent year-on-year.

The data sent retail stocks down on the JSE, with Truworths falling 3.28 percent to R81, while The Foschini Group declined 1.61 percent to R185.88 and Mr Price 1.9 percent 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 Bankserv-Africa Economic Transaction Index for May declined by 2 percent between May and April.

Shergeran Naidoo, the head of stakeholder relations at Bankserv-Africa said: “This is the largest decline since September 2013, and is a clear showing of the weakened South African economy.”