Retail sales fall for third consecutive month

Retail sales volumes for February declined by 0.5% year-on-year, marking a third consecutive month of annual decline.

However, clothing saw remarkable growth of 5.5% year-on-year, while food and beverage retail sales saw moderate growth.

The seasonally adjusted volumes slid by 0.1% month-on-month, following a 1.5% month-on-month increase in January and a 0.5% decline in December.

As such, three months-on-three months, volume sales are still higher by 1.2%, suggesting a slight positive contribution from the retail trade sector to 1Q23 GDP.

However, other high-frequency data corroborates our view that the economy likely slipped into a mild recession in 1Q23.

Sub-sector performance

Outcomes by category were mixed, with four out of seven categories recording a decline in annual volume sales.

Hardware material and pharmaceuticals recorded the most significant declines, of –7.7% and –3.0%, respectively.

Conversely, clothing and footwear sales grew by 5.5% year-on-year, supported by food and beverages retailer sales, which rose by 1.5%.


The sharp increase in production and operational costs induced by load-shedding will depend on corporate margins and employment and wage gains. This is according to FNB senior economist Siphamandla Mkhwanazi.

While non-labour income remains resilient, the outlook is less optimistic due to weaker corporate earnings prospects and their impact on dividend payouts.

Combined with elevated inflation, debt servicing costs, and depressed consumer confidence, this will result in muted household consumption expenditure going forward.

However, the credit market remains active, with consumers accumulating consumption credit faster, which could provide additional support to household consumption.

This may also increase the risk of credit defaults due to slower income growth and the accumulation of more expensive lines of credit, resulting in strained household financial positions.


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