October 18, 2024
A View on Demand in the Economy: Retail Sales Performance
In August 2024, South Africa’s retail sales grew by 3.2% annually, exceeding the expected 1.0% increase. This indicates a positive shift in consumer demand, driven by lower inflation and improved economic sentiment. Growth was primarily led by general dealers, which posted a 4.6% rise, contributing 2.1 percentage points to the overall growth, while hardware retailers saw a decline of 4.5%.
Despite the encouraging trend, consumer demand remains somewhat restrained due to tight household budgets and high interest rates. However, a recent rate cut of 25 basis points in September could boost spending and support further growth in the coming months. The full impact of this rate reduction is likely to be seen in retail data from October 2024 onwards.
Overall, while demand is gradually improving, households remain cautious. The combination of improved sentiment and lower inflation may pave the way for stronger economic growth as the year progresses.