Important South African consumer trends indicator declines for fourth month

South Africa’s wholesale trade sales have declined for a fourth consecutive month year-on-year, reflecting weak demand conditions in the country’s economy.

This is according to the Don Consultancy Group’s (DCG) chief economist, Chifi Mhango, who said that weak demand is due to high unemployment, interest rate hikes, and high fuel prices.

DCG is a specialised management-owned boutique consulting firm operating in South Africa and Malawi.

Mhango explained that wholesale trade sales data gives investors a closer look at the consumer economy. This is because wholesalers’ sales and inventory numbers are leading indicators of consumer trends.

The ratio of sales to inventory indicates to investors whether production may grow or decline in the future.

StatsSA released South Africa’s wholesale trade data for January 2023, which showed that wholesale trade sales declined by 3.6% year-on-year in real terms.

These sales have been declining since October 2022.

However, wholesale trade sales increased by 10.5% year-on-year, fuelled mainly by the agricultural sector.

The agricultural raw materials and livestock segment saw an increase of 42.4% year-on-year.

On the other hand, the precious stones, jewellery and silverware segment of wholesale trade sales saw a 61.6% year-on-year decrease.

The weak consumer demand reflected in wholesale trade data echoes other indicators that have been on the decline, including the RMB/BER business confidence index and the Consumer Confidence Index.