Retailer confidence dips again
Retailers’ confidence dipped in the first quarter, despite higher sales volumes, as consumers continue to turn away from big-ticket items.
It is also possible that consumers are being careful, as they first want to see what happens in the elections on 29 May.
The results from latest Retail Survey conducted by the Bureau for Economic Research (BER) show retailers of nondurable and semidurable goods had registered the largest upticks in volume growth, although profitability remained low.
After jumping from 32 index points to 47 during the festive season, the index slumped back to 34.
Lisette Ijssel de Schepper, chief economist at the BER, says this implies only a third of the retailers surveyed were satisfied with prevailing business conditions, similar to the business confidence reading at the beginning of 2023.
“The dip in confidence comes despite a slight improvement in seasonally adjusted retail sales volumes compared to the previous quarter, with the BER’s survey results pointing to low positive year-on-year growth.”
Apart from hardware, retail categories the BER surveyed reported somewhat better sales volumes during the first quarter.
Nondurable goods retailers registered the largest uptick in volume growth, supported by a further deceleration in food inflation and slower growth in restaurant and take-away spending, De Schepper says.
According to Statistics SA, food inflation decelerated to 7.2% in January, down from a peak of 14% in March 2023 and 8.7% in the fourth quarter of 2023.
The growth in restaurant and takeaway sales volumes slowed from 7.9% in the first quarter of 2023 to 1.5% by the fourth quarter, easing pressure on food sales at the retail level.
De Schepper says: “Looking ahead, lower levels of load shedding, moderating food inflation and interest rate cuts [expected to commence in July] should spark a more noticeable recovery in retail trade from the third quarter.
“But first, the political and economic risks around the 29 May national election loom large.”