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Johannesburg - Growth in South Africa’s retail sales accelerated to 7.1% year-on-year at constant prices in August from an upwardly revised 3.0% in July, Statistics South Africa said on Wednesday.
Stats SA said retail sales grew by 4.1% in the three months to August, compared with the same period a year ago, also at constant prices.
On a month-on-month basis retail sales were up 0.7% in August.
Economists polled by Reuters last week expected retail sales growth to quicken to 4.9% year-on-year in August.
Razia Khan, head of Africa Research at Standard Chartered said the data is key to getting a clearer picture of the strength of consumer spending.
"While vehicle sales data was more positive, previous retail sales data was skewed by the high base of South Africa having hosted the World Cup last year. But now we’re getting a better sense that things might be turning around for the South African consumer, despite the central bank trying to emphasise the weakness recently," she said.
She said that while consumption is recovering, a 7% retail sales growth from a weaker base is not particularly robust.
“With the Sarb (SA Reserve Bank) sounding much more dovish recently however, it does lessen the risk of a rate cut as early as the November meeting - although we will still need to pay careful attention to any commentary that is out before then."
The retail sales data and consumer inflation figures suggested that the Sarb would hold back on an interest rate cut in November.
Retail sales - previously a key driver of economic growth - have grdually risen after a contraction during 2009 but year-on-year expansion has been muted this year as South African consumers remain heavily indebted.
About a million jobs were lost during the recession and unemployment currently stands close to 26% a factor expected to constrain robust growth in retail sales.
Growth in household consumption slowed to an annualised 3.8% in the second quarter from 5.2% in the first quarter as spending was constrained by rising inflation, the Reserve Bank said last week.
With demand sluggish in the economy, some market players say the Reserve Bank could still cut interest rates further from 5.5% to add to 650 basis points worth of reductions between November 2008 and November 2010.
Stats SA said retail sales grew by 4.1% in the three months to August, compared with the same period a year ago, also at constant prices.
On a month-on-month basis retail sales were up 0.7% in August.
Economists polled by Reuters last week expected retail sales growth to quicken to 4.9% year-on-year in August.
Razia Khan, head of Africa Research at Standard Chartered said the data is key to getting a clearer picture of the strength of consumer spending.
"While vehicle sales data was more positive, previous retail sales data was skewed by the high base of South Africa having hosted the World Cup last year. But now we’re getting a better sense that things might be turning around for the South African consumer, despite the central bank trying to emphasise the weakness recently," she said.
She said that while consumption is recovering, a 7% retail sales growth from a weaker base is not particularly robust.
“With the Sarb (SA Reserve Bank) sounding much more dovish recently however, it does lessen the risk of a rate cut as early as the November meeting - although we will still need to pay careful attention to any commentary that is out before then."
The retail sales data and consumer inflation figures suggested that the Sarb would hold back on an interest rate cut in November.
Retail sales - previously a key driver of economic growth - have grdually risen after a contraction during 2009 but year-on-year expansion has been muted this year as South African consumers remain heavily indebted.
About a million jobs were lost during the recession and unemployment currently stands close to 26% a factor expected to constrain robust growth in retail sales.
Growth in household consumption slowed to an annualised 3.8% in the second quarter from 5.2% in the first quarter as spending was constrained by rising inflation, the Reserve Bank said last week.
With demand sluggish in the economy, some market players say the Reserve Bank could still cut interest rates further from 5.5% to add to 650 basis points worth of reductions between November 2008 and November 2010.
