Skip to main content
Invest Now
012 012 5270
Copyright © Aluma Capital (Pty) Ltd. All rights reserved.
Aluma Capital (Pty) Ltd is a registered Financial Services Provider (FSP 46449) in terms of The Financial Advisory and Intermediary Services Act (37 of 2002)
Frederick Mitchell, Chief Economist | Aluma Capital (Pty) Ltd
Frederick Mitchell
February 24, 2025

View on Demand in the Economy

Retail Sales Performance

December 2024

In December 2024, South Africa’s retail sales rose 3.1% year-on-year, surpassing expectations and indicating a rebound in consumer demand. The SACCI Business Confidence Index also increased, and recent interest rate cuts promise to further stimulate demand. Overall, this positive momentum supports economic growth heading into 2025.

Retail sales in South Africa surpassed expectations in December 2024, increasing by 3.1% year-on-year, well above the predicted 2.6% rise. This unexpected growth suggests a moderate rebound in consumer demand following the Black Friday sales in November.

The SACCI Business Confidence Index also improved, rising from 118.1 to 121.0 points in December, indicating increased demand. Additionally, lower consumer inflation and a recent 50-basis point interest rate cut by the South African Reserve Bank in January 2025 could further boost demand in the coming months.

Key drivers of retail sales growth included:

  • General Dealers: Increased by 2.0%, contributing 0.9 percentage points to overall growth.
  • Textiles and Clothing: Grew by 7.8%, adding another 1.8 percentage points.

This encouraging growth in retail sales signals a positive outlook for the economy, especially as fourth-quarter economic data continue to exceed expectations. The interest rate cuts in September and November appear to have eased financial pressures on households, showing positive results. Furthermore, withdrawals from the two-pot system have positively influenced demand from October through Black Friday at the end of November 2024. The sustained consumer demand trend in December 2024 bodes well for economic growth and job creation as we head into 2025.

Back to News

More Coverage

Budget Speech 2025

A Balancing Act
Much has happened in the last twelve months as well as the last month since the postponement of the February 2025’s budget. The big talking point and “bone of contention” was the mooted 2% increase in VAT. This increase was met with fierce resistance and made “balancing the budget” quite difficult, as the government has to decide between increasing taxes of cutting expenditures, leaving the Government of National Unity (GNU) between a “rock and a hard place” as it currently stands. The increase in VAT or other taxes sprout from the various expenditure items the government announced or want to implement which among other things include the National Health Insurance (NHI), a transformation fund and continuation of the Covid-19 relief grant and the possible introduction of a Basic Income Grant (BIG).

A View on Company Profits

2024 Q4
Company profitability is vital for investors and the government. In South Africa, the Gross Operating Surplus (GOS) indicates positive growth, with profits surpassing inflation in late 2024. Notable gains in the Agricultural sector (68.8%) contrast with modest growth in Mining and Personal Services, reflecting an optimistic economic outlook post-election.

A Sticky Affair

The South African Budget Speech Postponement
The Laffer Curve is an economic theory that describes the relationship between tax rates and tax revenue. Proposed by economist Arthur Laffer, the curve suggests that there is an optimal tax rate that maximizes government revenue without discouraging productivity, investment, and economic growth. The central idea is that increasing tax rates beyond a certain threshold can lead to diminishing returns; higher taxes may disincentivize work, entrepreneurship, and investment, ultimately reducing the overall tax base.

GDP, Economic Growth and Inflation

2024 Q4
The South African economy showed resilience with a 0.6% growth in the fourth quarter of 2024, despite challenges. Key sectors like Agriculture and Finance thrived, and improved consumer demand signals optimism for 2025. With continued market confidence and government reforms, there is potential for significant economic advancement ahead.

Private Sector Credit Extension (PSCE)

January 2025
In January 2025, credit demand rose by 4.6%, exceeding expectations, although overall demand is still modest. Interest rate cuts are expected to enhance property and asset purchases as disposable incomes improve. As consumers increasingly rely on credit, overall demand for goods and fixed assets is poised to rise throughout 2025
0:00
0:00