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Frederick Mitchell, Chief Economist | Aluma Capital (Pty) Ltd
Frederick Mitchell
May 26, 2025

A view on Demand in the Economy

Retail Sales Performance

March 2025

Retail sales in South Africa increased by 1.5% in March, falling short of the market expectation of 2.0%. This modest growth indicates a slower-than-expected recovery in consumer demand since late 2024, particularly following a weak economic starting point earlier in the year.

The South African Chamber of Commerce and Industry (SACCI) reported a decline in the Business Confidence Index, which dropped from 125.8 points in February to 123.5 in March. Additionally, the FNB/BER consumer index for the first quarter of 2025 fell sharply from -6 to -20 points, reflecting increasing consumer caution. Despite low inflation levels and an interest rate cut by the South African Reserve Bank in January 2025, these factors continue to have a limited positive impact on consumer spending.

Key contributors to the small rise in retail sales included:

  • Pharmaceuticals, medical goods, cosmetics, and toiletries: up 7.1%, contributing 0.5 percentage points.
  • Textiles and Clothing: increased by 3.5%, adding another 0.5 percentage points.

This growth during March 2025 suggests some positive momentum, although at a slower pace than initially anticipated. The interest rate cuts implemented from September 2024 to January 2025 appear to have eased household financial pressures, leading to a gradual recovery in demand. Maintaining this momentum through the rest of 2024 and into 2025 will be vital, as consumer demand remains a key driver of economic growth and job creation in South Africa. A potential interest rate reduction at the end of May 2025 could further support demand in the near term.

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