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Frederick Mitchell, Chief Economist | Aluma Capital (Pty) Ltd
Frederick Mitchell
September 23, 2024

Retail Sales Performance

A view on Demand in the Economy

Retail sales increased by 2.0% in July 2024, falling short of the anticipated 3.5% growth forecasted by the market. The primary contributors to this growth were:

  • General dealers, which experienced a 4.4% increase, contributing 1.8 percentage points to overall retail sales growth.
  • Pharmaceutical and medical goods retailers, which grew by 5.9%, adding 0.5 percentage points to retail growth.

Annual retail growth across other categories also showed notable expansion in July 2024, signaling positive demand in the economy moving forward. However, there was a downside, as retailers of hardware, paint, and glass contracted by 6.3%, which pulled overall retail sales growth down by 0.5 percentage points for the month.

Despite the year-on-year increase in retail sales for July, overall demand remains weak. Ongoing consumer indebtedness, general inflation, and high interest rates continue to erode purchasing power.

The interest rate decision of lowering interest rates by a mere 25 basis points by the South African Reserve Bank’s (SARB) Monetary Policy Committee (MPC) provided very little relief given very low consumer demand and overall indebtedness of households. This rate cut could have been the catalyst needed to stimulate demand within the South African economy to support economic growth in the near future as demand remains a key ingredient in the South African economic “growth mix”.

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