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Frederick Mitchell
December 13, 2024

A View on Demand in the Economy: Retail Sales Performance

October 2024

In 2024, South Africa’s retail sales rose by 6.3%, significantly surpassing the expected 2.1% increase, indicating a rebound in consumer demand. Key contributors included substantial growth in general dealers and household goods. Lower inflation and a potential interest rate cut could further enhance consumer optimism and spending moving forward.

omfortably exceeding the predicted increase of 2.1%. This stronger-than-expected growth signals a moderate resurgence in consumer demand, suggesting that consumer finances may be improving. The SACCI Business Confidence Index rose from 110.2 to 114.2 points in October while increasing consumer confidence supported growth in demand further. Additionally, lower consumer inflation and a possible interest rate reduction from the South African Reserve Bank in early 2025 could further boost demand.

The growth in retail sales was primarily driven by:

  • General Dealers: Up 11.5%, contributing 4.9 percentage points to total growth.
  • Household Furniture, Appliances, and Equipment: Increased by 16.6%, adding 0.7 percentage points.
  • Textiles and Clothing: Grew by 3.1%, contributing 0.5 percentage points.
  • Pharmaceutical and Medical Goods: Increased by 5.3%, accounting for 0.4 percentage points of the total growth in October 2024.

However, the hardware, paint, and glass retail category experienced a contraction of 3.7%, reducing overall growth by 0.3 percentage points.

The better-than-expected growth in retail sales bodes well for the economy, indicating that the interest rate reduction in September has provided some relief for households. Additionally, withdrawals from the two-pot system have positively impacted demand this October. Sustaining this momentum through the remainder of 2024 and into 2025 will be crucial, as consumer demand is a key driver of economic growth in South Africa.

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A View on Demand in the Economy: Retail Sales Performance

In 2024, South Africa’s retail sales rose by 6.3%, significantly surpassing the expected 2.1% increase, indicating a rebound in consumer demand. Key contributors included substantial growth in general dealers and household goods. Lower inflation and a potential interest rate cut could further enhance consumer optimism and spending moving forward.

Consumer Inflation

Inflation in South Africa rose slightly from 2.8% in October to 2.9% in November, driven mainly by housing and utilities, food, and miscellaneous goods. Despite price increases, there are signs of slowing growth. The MPC’s recent 25 basis point interest rate cut may ease financial pressures on consumers, supporting future demand and economic momentum.

Manufacturing Production

In 2024, South Africa’s manufacturing production rose by 0.8%, following a 1.4% increase in September. Key contributors included significant growth in petroleum, food, and basic iron and steel sectors. Despite a decline in the motor vehicle sector, the manufacturing industry remains vital, employing 1.6 million people and driving economic growth.

Challenges, Changes, and New Horizons

To reflect on 2024, what a remarkable year it has been! There were significant developments both locally and globally—not just economically but politically as well. We can all agree, “what a year it has been!”

Mining Production and Sales

Mining South Africa rose by 1.4% in October 2024, building on a solid 4.9% growth from September. Key contributors included significant increases in iron ore, platinum group metals, and diamonds. Mineral sales also increased by 1.6%. Despite some challenges, the sector is rebounding strongly, supporting over 484,000 jobs. With improved economic confidence and a focus on stabilising production, the future looks promising for South Africa’s mining industry.
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