Retail sales growth quickens to 3.8%

Johannesburg - Growth in South Africa's retail sales accelerated to a five month high of 3.8% year-on-year in February from a revised 2.2% in January, Statistics South Africa said on Wednesday.

On a month-on-basis basis, sales were up 2.7% in February and also increased by 2.7% in the three months to February compared with the same period the previous year.

Economists polled by Reuters forecast year-on-year retail sales growth of 1.7%.

Analyst Anisha Arora said: "After a fairly volatile series in 2012, 2013 is bringing us a somewhat tapering trend, but so far retail growth has been able to hold above 1.0% as consumer spending has not disappeared altogether.

"However we do see signs of consumption suffering with new vehicle sales having fallen by 2.1% y/y in Mar, while prevalence of higher consumer prices and exchange rate pressures should keep demand for more elastic goods such as luxuries and vehicles capped.

"Overall, South Africa will still be relying on government spending and fixed investment to aid positive GDP growth in Q1, while we keep to the view of unchanged rates through 2013 will little room for policy manoeuvre."

The rand firmed to R9.1625 against the dollar by 11:19 GMT from R9.1775 before the data was released at 11:00 GMT. 

The yield on the 2026 benchmark bond edged up to to 6.95% from 6.94%.

Growth in retail sales has remained hesitant, with heavily indebted households reluctant to spend despite interest rates being at four-decade lows.

Growth in household spending, historically a key driver of the economy, slowed to 2.4% in the fourth quarter of 2012, constrained by a slow increase in disposable incomes and rising inflation, the Reserve Bank said in its latest quarterly bulletin.