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Frederick Mitchell, Chief Economist | Aluma Capital (Pty) Ltd
Frederick Mitchell
March 20, 2025

View on Demand in the Economy

Retail Sales Performance

January 2025

Retail sales in South Africa significantly surpassed market expectations in January 2025, rising by 7.0% year-on-year, well above the anticipated contraction of 1.8%. This unexpected growth suggests a resurgence in consumer demand, particularly notable as it follows a low base in 2024.

The South African Chamber of Commerce and Industry (SACCI) Business Confidence Index also remained stable in January, further bolstering confidence in demand. Additionally, a decrease in consumer inflation coupled with an interest rate cut by the South African Reserve Bank in January 2025 appears to have positively impacted consumer spending.

Key contributors to the growth in retail sales included:

  • General Dealers: Increased by 8.4%, contributing 3.6 percentage points to overall growth.
  • Textiles and Clothing: Grew by 10.1%, adding another 1.6 percentage points.

This encouraging retail performance in January 2025 signals positive momentum for the economy as South Africa approaches the end of the first quarter. The interest rate cuts implemented from September 2024 to January 2025 seem to have relieved financial pressure on households, with demand showing signs of recovery. Maintaining this momentum throughout December 2024 and into 2025 will be essential, as consumer demand remains a vital driver of economic growth in South Africa.

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More Coverage

South Africa is trapped in severe economic stagnation, facing a projected 1.0% growth rate for 2026, 33.6% unemployment, and sharp contractions in mining (-12.7%) and manufacturing (-4.3%). Exposed to global fuel shocks via depleted reserves and >R12.00/litre pump levies, the nation is also caught in a fiscal spiral where national debt nears 80% of GDP and interest payments exceed R1 billion daily. Escaping this trap requires four urgent structural reforms: halting interest rate hikes for supply-side inflation, replacing rigid B-BBEE quotas with job-creation incentives, scrapping Expropriation Without Compensation (EWC), and deregulating Transnet’s logistics corridors.

Mining Production and Sales for August 2026

South Africa’s mining sector remains a vital source of jobs, foreign exchange and economic growth, but August’s sharp fall in mining output and sales highlights the mounting pressure on the industry. Rising fuel and energy costs, policy uncertainty and growing trade challenges are weighing on producers, even as firm gold prices and temporary US tariff exemptions offer some relief. Read the full report for a closer look at the latest figures, the forces shaping the sector and what they could mean for mining’s future in South Africa.

MACROECONOMIC & INVESTMENT INSIGHTS | OCTOBER 2026

A $100-plus oil price, a weaker rand and record fuel hikes are putting South Africa’s economy under mounting pressure, while strategic reserves offer little protection. This report examines how imported inflation is squeezing households and businesses, why higher interest rates may do little to tackle its root causes, and how sluggish growth and rising debt are tightening the fiscal squeeze. It also explores the stakes for trade with the United States and AGOA, and the policy choices that could restore investor confidence, unlock growth and put the country on a more resilient path.

International Trade and Trade Balance – August 2026

South Africa recorded a trade surplus of R20.4 billion in August 2026, as exports continued to outpace imports. Export growth has exceeded import growth over the first eight months of the year, reflecting subdued domestic demand among businesses and consumers. But with higher fuel prices and tighter monetary policy expected to weigh on spending, demand is likely to recover only gradually. Read the full report for a closer look at the trade figures and what they could mean for South Africa’s economy in the months ahead.

Private Sector Credit Extension (PSCE): August 2026

South Africa’s credit market is showing surprising resilience, with credit demand rising by 7.5% in August 2026 despite renewed interest-rate pressure, elevated inflation and mounting household costs. While mortgage advances continued to grow, the fragile recovery in the property market highlights the strain caused by subdued investment, high debt levels and rising municipal and energy expenses. At the same time, sluggish instalment credit growth and continued reliance on short-term borrowing reveal how consumers are navigating increasingly difficult financial conditions. With higher oil prices, geopolitical risks and further SARB tightening adding to the pressure, this report examines what the latest credit trends reveal about household finances, business confidence and the broader South African economy.