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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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More Coverage

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Mining Production and Sales for August 2026

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MACROECONOMIC & INVESTMENT INSIGHTS | OCTOBER 2026

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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.