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Johannesburg - Growth in South Africa’s retail sales slowed to 6.4% year-on-year in January at constant prices, compared with an 8.3% increase in December, Statistics South Africa said on Wednesday.
Stats SA said retail sales grew by 7.7% in the three months to January, compared with the same period a year ago, also at constant prices.
A Reuters poll showed economists expected January retail sales to rise by 7.5% on the same period a year before.
Analysts were disappointed by the pace of growth.
ETM analyst Chris Becker said a higher number was expected.
“We were expecting 7.9% but we did see a downside risk to that forecast. We expected some stronger demand to come through in December and January, but expected that to taper off as we have not seen a strong economic rebound," he said.
“We have also seen household credit growth remaining very weak, and the two mirror each other. It shows that CPI (consumer) inflation pressures are not very strong at the moment. We still expect to see it (CPI) surprising on the downside.”
Peter Attard Montalto, Nomura emerging market economist, said the figure was a bit below expectations "but on our own forecast".
“This will play into the fears of (Reserve Bank governor Gill) Marcus yesterday that even though there are upside risks to CPI she is more concerned by sustainability of recovery, impact of price rises on consumption recovery and impact of MENA (Middle East, North Africa)/Japan on South Africa.
“As such, even with inflation pressures mounting we don’t see a hike any earlier than November - growth will dominate till then.”
Efficient Group economist Merina Willemse said it was "very low".
“It’s very low but it was expected to be a bit lower, in line with what we see in the consumer confidence index. This is an indication that the consumer is still struggling and the first quarter of this year will not be easy," she said.
“I think it is one of the things that will have impact on the monetary policy committe’s decision next week but only a small impact. The big thing will be Japan. I think at this time I do not see a rate hike simply because global growth and local growth remains very slow.”
Gina Schoeman, senior economist at Absa Capital said the figure was a disappointment.
“It comes as a disappointment to consensus and our forecasts. I guess the good news about it is that it takes you back more or less in line to where retail sales growth was sitting in October, and well ahead of what it was at this point last year," she said.
“I would not say it is an awful number. But nonetheless I would not say it changes our view at all. If anything, it would support our view that the Reserve Bank remains worried about the growth risks in South Africa and as a result we are not expecting rate hikes this year.”
The retail sales number has crept up in recent months as expenditure improves, but credit data has shown consumers are still reluctant to borrow and splurge on worries about the economic outlook.
Any pick-up in retail sales should bode well for growth and the central bank has said it expects it to be sustained.
Retail sales have previously been a key driver for economic growth, but experienced a slowdown during a recession in 2009.
Stats SA said retail sales grew by 7.7% in the three months to January, compared with the same period a year ago, also at constant prices.
A Reuters poll showed economists expected January retail sales to rise by 7.5% on the same period a year before.
Analysts were disappointed by the pace of growth.
ETM analyst Chris Becker said a higher number was expected.
“We were expecting 7.9% but we did see a downside risk to that forecast. We expected some stronger demand to come through in December and January, but expected that to taper off as we have not seen a strong economic rebound," he said.
“We have also seen household credit growth remaining very weak, and the two mirror each other. It shows that CPI (consumer) inflation pressures are not very strong at the moment. We still expect to see it (CPI) surprising on the downside.”
Peter Attard Montalto, Nomura emerging market economist, said the figure was a bit below expectations "but on our own forecast".
“This will play into the fears of (Reserve Bank governor Gill) Marcus yesterday that even though there are upside risks to CPI she is more concerned by sustainability of recovery, impact of price rises on consumption recovery and impact of MENA (Middle East, North Africa)/Japan on South Africa.
“As such, even with inflation pressures mounting we don’t see a hike any earlier than November - growth will dominate till then.”
Efficient Group economist Merina Willemse said it was "very low".
“It’s very low but it was expected to be a bit lower, in line with what we see in the consumer confidence index. This is an indication that the consumer is still struggling and the first quarter of this year will not be easy," she said.
“I think it is one of the things that will have impact on the monetary policy committe’s decision next week but only a small impact. The big thing will be Japan. I think at this time I do not see a rate hike simply because global growth and local growth remains very slow.”
Gina Schoeman, senior economist at Absa Capital said the figure was a disappointment.
“It comes as a disappointment to consensus and our forecasts. I guess the good news about it is that it takes you back more or less in line to where retail sales growth was sitting in October, and well ahead of what it was at this point last year," she said.
“I would not say it is an awful number. But nonetheless I would not say it changes our view at all. If anything, it would support our view that the Reserve Bank remains worried about the growth risks in South Africa and as a result we are not expecting rate hikes this year.”
The retail sales number has crept up in recent months as expenditure improves, but credit data has shown consumers are still reluctant to borrow and splurge on worries about the economic outlook.
Any pick-up in retail sales should bode well for growth and the central bank has said it expects it to be sustained.
Retail sales have previously been a key driver for economic growth, but experienced a slowdown during a recession in 2009.
