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Frederick Mitchell, Chief Economist | Aluma Capital (Pty) Ltd
Frederick Mitchell
July 17, 2025

A View on Demand in the Economy

Retail Sales Performance

May 2025

Retail sales in South Africa increased by 4.2% in May, slightly below the market expectation of 4.3% as estimated by analysts for the month. This growth appears to suggest that demand in the South African economy from a consumer’s perspective have rebounded somewhat after a 5.2% increase in April. The consecutive increases in April and May suggest a slow but steady recovery in consumer demand, following the interest rate reductions initiated with monetary easing beginning in September 2024.

The South African Chamber of Commerce and Industry (SACCI) reported a modest rise in confidence, with its index increasing from 114.9 in April to 115.8 in May 2025. Additionally, the FNB/BER consumer index for the second quarter of 2025 improved from -20 to -10 points, indicating cautious but improving consumer sentiment. Despite low inflation and the Reserve Bank’s interest rate cut in January 2025, these factors appear to be gradually influencing consumer behaviour and spending habits.

Key contributors to the modest rise in retail sales included:

  • General dealers: up 3.6%, contributing 1.6 percentage points.
  • Textiles and clothing: increased by 12.5%, adding 2.1 percentage points.

This growth in May 2025 reflects ongoing positive momentum from April’s retail performance and indicates a manageable recovery in demand. The interest rate cuts implemented between September 2024 and January 2025 seem to have alleviated household financial pressures, supporting a gradual uptrend in demand over the past two months. Sustaining this momentum will be crucial throughout 2025, as consumer demand remains a key driver of economic growth and employment in South Africa. Additionally, further interest rate reductions later in the year could bolster demand into late 2025 and early 2026.

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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

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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.