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
December 12, 2025

A view on Demand in the Economy

Retail Sales Performance

October 2024

In October, retail sales in South Africa rose by 2.9%, surpassing the anticipated 2.3% growth forecasted by analysts. This growth highlights a continued recovery in consumer demand within the economy.

Despite this positive trend, households are navigating several challenges, including the rising cost of living reported by the South African Reserve Bank, sluggish wage growth due to limited economic expansion, and uncertainties concerning international trade relations with the United States. Ongoing diplomatic tensions between Washington and Pretoria, coupled with the lapse of the African Growth and Opportunity Act (AGOA) in September 2025, contribute to a cautious consumer spending environment.

October’s 2.9% increase reflects a continuous recovery trend from April to October, likely supported by interest rate cuts and monetary easing measures introduced from September 2024 to August 2025.

The South African Chamber of Commerce and Industry (SACCI) reported a slight uptick in business confidence, with its index rising from 121.1 in September to 123.8 in October 2025. However, the FNB/BER consumer confidence index dipped from -10 in the second quarter to -13 in the third quarter of 2025, highlighting consumers’ cautious spending approach. Although inflation remains low and the Reserve Bank lowered interest rates in January, July, and November 2025, these factors are gradually impacting consumer behaviour and spending.

September’s retail sales growth was driven by:

  • Other retailers: up 7.2%, contributing 0.7 percentage points
  • Retailers of textiles, clothing, footwear, and leather goods: up 5.8%, adding 1.0 percentage points
  • Retailers of household furniture, appliances, and equipment: up 13.0%, adding 0.5 percentage points
  • Retailers of hardware, paint, and glass: up 5.8%, adding 0.5 percentage points

October’s retail sales growth signals sustained momentum from July onwards, indicating a steady yet cautious recovery in consumer demand. Interest rate cuts between September 2024 and November 2025 have eased some financial pressures on households, supporting increased demand over the past four months and boosting recent retail sales figures. It is important to acknowledge that the impact of interest rate changes typically manifests within 12 to 24 months; therefore, current reductions are just beginning to yield results.

Sustaining this momentum is vital for the remainder of 2025, as consumer spending significantly contributes to South Africa’s economic growth and employment. This is particularly significant given the 0.5% GDP growth in the third quarter of 2025. The interest rate reduction in November 2025 is expected to further support consumer demand into late 2025 and early 2026.

Back to News

More Coverage

Why Hiking Interest Rates on Imported Inflation Will Stifle South Africa’s Fragile Economy

South Africa’s latest inflation figures provide some welcome relief, but a renewed surge in global oil prices threatens to undermine this progress. With fuel prices rising sharply due to external geopolitical and supply-side pressures, the debate over whether the SARB should respond with higher interest rates has become increasingly important. This article argues that raising rates to combat imported inflation would risk doing more harm than good—placing further pressure on households, businesses and investment in an economy already facing weak growth, high unemployment and significant industrial challenges.

Private Sector Credit Extension (PSCE): July 2026

Private sector credit growth remained resilient in July 2026, reflecting continued demand for financing despite elevated living costs and renewed interest rate uncertainty. While overall credit extension continues to benefit from the rate-cutting cycle that began in late 2024, subdued property activity and rising household reliance on short-term credit highlight ongoing pressure on consumers and businesses.

Producer Price Inflation – July 2026

South Africa’s producer price inflation eased from 7.5% to 5.7% year-on-year in July 2026, but the slowdown offers little comfort as rising fuel, energy and intermediate-goods costs continue to reverberate through the economy. With petroleum-related products driving much of the increase, mining costs still elevated, and consumer inflation already above the South African Reserve Bank’s new target range, inflationary pressures remain firmly entrenched, even as monthly producer prices declined. This report examines the sectors driving the latest figures, the implications of ongoing Middle East-related energy shocks, and what the data could mean for consumer prices, inflation expectations, and the Reserve Bank’s upcoming interest-rate decision in September.

Inflation Relief, Real-Economy Headwinds, and the Geopolitical Imperative for South Africa

South Africa has received a much-needed inflation reprieve, with July headline inflation easing to 4.3% and giving the South African Reserve Bank room to hold interest rates steady, but monetary relief alone cannot rescue an economy facing contracting mining and manufacturing sectors, depressed investment, mass unemployment, and mounting pressure on export earnings. This report examines how a 12.5% US tariff and a 56% annualised plunge in exports are intensifying the country’s economic vulnerability, while diplomatic disputes over property rights, empowerment policy, rural safety, political rhetoric, and South Africa’s geopolitical alliances threaten access to the strategically vital US market. It also sets out the practical policy choices, from structural reform and infrastructure investment to pragmatic trade diplomacy, that could determine whether South Africa converts this brief moment of inflation stability into sustainable growth or slips deeper into stagnation

Consumer Inflation – July 2026

South Africa’s July 2026 inflation reading delivered a genuine surprise: consumer prices rose just 4.3% year-on-year, well below June’s 5.0% and under the 4.5% the market had pencilled in, yet the story beneath that headline is far more complicated than a simple cooling trend. Goods inflation has slipped into the SARB’s new 2–4% target band, but services inflation stubbornly holds at 5.0%, revealing that price pressure is now entering the economy through a channel monetary policy struggles to reach. Meanwhile, housing, transport, and financial services drove the bulk of the increase; fuel costs remain elevated amid the renewed Middle East conflict and rising oil prices; and households and businesses relying on short-term credit are dangerously exposed to any shift in rates, the rand, or import costs. Add US tariffs weighing on manufacturing, fragile 0.5% first-quarter growth, and a Reserve Bank that has already wrong-footed markets twice this year, and the run-up to the 23 September MPC meeting becomes anything but predictable. This report unpacks what the numbers actually signal, why the SARB is holding its nerve, and what it will take to tip the next rate decision either way.