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
November 24, 2025

A View on Demand in the Economy

Retail Sales Performance

September 2025

Retail sales in South Africa rose by 3.1% in September, slightly exceeding market expectations of 3.0%, as anticipated by analysts for that month. This growth indicates a continuing recovery in consumer demand within the economy.

The increase in consumer demand, as shown by the retail sales figures, occurs amidst several challenges facing households. These challenges include rising living costs, as highlighted by the South African Reserve Bank; sluggish wage growth due to slow economic expansion; and uncertainties related to South Africa’s international trade with the United States. Ongoing diplomatic tensions between Washington and Pretoria, the failure to conclude a new trade agreement, and the expiry of the African Growth and Opportunity Act (AGOA) deal with the US in September 2025 continue to foster a cautious environment for consumer spending.

The 3.1% rise in September reflects a sustained recovery trend observed from April to September, likely bolstered by interest rate cuts and monetary easing measures implemented from September 2024 to August 2025.

The South African Chamber of Commerce and Industry (SACCI) noted a slight increase in business confidence, with its index climbing from 116.7 in July to 121.1 in September 2025. In contrast, the FNB/BER consumer confidence index fell from -10 points in the second quarter to -13 in the third quarter of 2025, underscoring consumers’ cautious approach to spending in the current economic climate. Although inflation remains low and the Reserve Bank reduced interest rates in January and July 2025, these factors are gradually influencing consumer behaviour and spending patterns.

Key contributors to the growth in September’s retail sales included:

  • General dealers: up 1.9%, contributing 0.9 percentage points
  • Retailers of textiles, clothing, footwear, and leather goods: increased by 4.4%, adding 0.7 percentage points
  • Retailers of household furniture, appliances, and equipment: grew by 11.4%, contributing 0.5 percentage points

The growth in retail sales in September suggests ongoing positive momentum from July, indicating a steady, yet cautious, recovery in consumer demand. The interest rate cuts made between September 2024 and July 2025 have alleviated household financial pressures, reinforcing the gradual increase in demand over the past four months and bolstering the recent retail sales figures. It is important to note that interest rate changes typically take 12 to 24 months to yield measurable effects within the economy; thus, these reductions are only beginning to show results.

Maintaining this momentum will be crucial throughout 2025, as consumer spending is a key driver of South Africa’s economic growth and employment. This is especially important given the 0.8% GDP growth recorded in the second quarter of 2025. The interest rate reduction in November 2025 is expected to further sustain and enhance consumer demand into late 2025 and early 2026.

Back to News

More Coverage

Mining Production and Sales for April 2026

In May 2026 South Africa’s mining sector slipped into contraction, down 5.4% month on month after April’s revised 8.0% gain — driven by steep declines in iron ore ( 12.7), coal ( 6.1) and PGMs ( 4.4) that together shaved several percentage points off output; mining output for the rolling quarter fell 1.7%, led by drops in manganese, other metallics and coal. Yet nominal mining sales surged 13.9% on a 70.5% jump in platinum, stronger gold and coal receipts, underscoring a split between weaker physical production and firmer export earnings. With the sector employing roughly 476,000 people, having expanded in Q1 2026 amid higher gold and platinum prices, the industry remains central to South Africa’s economy, even as it grapples with new trade tariffs (including US and proposed manganese measures), the loss of AGOA preferences, and uncertainty around the Mining Charter. Read the full report for detailed drivers, regional implications, and policy paths to stabilise output and sustain foreign earnings resilience

South Africa’s Inflation Dilemma: Why Bleeding an Anaemic Patient Won’t Cure the Illness

In “South Africa’s Inflation Dilemma: Why Bleeding an Anaemic Patient Won’t Cure the Illness,” the article navigates the precarious economic landscape facing South Africa amidst rising inflation and stagnant growth. With consumer demand faltering due to slow wage growth, recent fuel price hikes, and increased municipal fees, the country stands at a critical junction. The looming threat of another interest rate hike by the South African Reserve Bank could further cripple an already fragile economy, likened to an anaemic patient, with potential long-term repercussions for job creation and corporate investment. However, recent geopolitical developments offer a flicker of hope, as a ceasefire in the US-Iran conflict has led to a decline in global oil prices, promising immediate relief for consumers and a slower inflation trajectory. The article argues that maintaining the current repo rate is essential to allow this relief to translate into economic growth and stability. Dive into the full report to explore how South Africa can navigate these turbulent waters without sacrificing its fragile economic health.

Private Sector Credit Extension (PSCE): May 2026

In a rapidly shifting economic landscape, May 2026 saw credit demand growth of 8.6%, falling short of the anticipated 9.4% forecast. Since interest rate cuts began in September 2024, credit growth has generally surged, particularly following strategic interest rate reductions by the South African Reserve Bank amidst global tensions and skyrocketing energy costs. However, the South African property market stagnates due to soaring consumer debts, muted wage increases, and escalating living expenses, notably in household fuel and utility prices. While instalment credit sales posted a modest rise, the reliance on short-term credit underscores consumer struggles with surging living costs. With inflation hovering above target and persistent high fuel prices, the anticipated interest rate hike in July could further suppress demand, adding pressure to the already challenging economic recovery. Discover the dynamics shaping South Africa’s financial climate in this insightful analysis.

Producer Price Inflation – May 2026

In May 2026, producer price inflation surged to 7.8%, driven by significant fuel price shocks that impacted goods leaving the factory gate. Important sectors saw remarkable price hikes, with Coke, petroleum, and chemical products alone rising by 22%. Meanwhile, mining costs soared by 28.1%, heightening concerns about ongoing inflationary pressures. With consumer inflation climbing to 4.5%, surpassing the South African Reserve Bank’s target of 2% to 4%, the economic landscape is becoming increasingly unstable. Readers will find critical insights into how these trends affect overall inflation expectations and the imminent interest rate decisions that could shape South Africa’s economic future. Dive into the full report for a comprehensive analysis of these pivotal issues and their implications.

South Africa’s Crypto Crossroads: Modern Regulation or an Economic Time Machine?

Dive into “South Africa’s Crypto Crossroads: Modern Regulation or an Economic Time Machine?” an eye-opening exploration of South Africa’s latest Draft Capital Flow Management Regulations, 2026. As the South African government aims to modernise cross-border financial regulations and tighten digital currency controls, these proposed changes have sparked uproar among fintech leaders and legal experts. The draft threatens to overreach into constitutional rights, potentially stifling innovation and economic growth. With concerns over encroachments on privacy and powers to seize assets, critics argue that the regulations could deter investment and spark a talent exodus. As the public comment period extends, the country’s financial future hangs in the balance, poised between innovation and economic regression. Discover why industry stakeholders are on high alert and advocating for a careful recalibration of this legislative move.