Johannesburg - Growth in South Africa's retail sales slowed to 1.9% year-on-year in January from a revised 2.2% in December, Statistics South Africa said on Wednesday.
On a month-on-basis basis, sales were down 1.2% in January, but increased by 2.5% in the three months to January compared with the same period the previous year.
Economists polled by Reuters forecast year-on-year retail sales growth of 3.5% for January.
"Very poor retail sales number for January. The move shows the fragility of consumption in the face of falling credit growth which had been a key support through 2011-12.
"We had expected a consumption slowdown to occur but thought it would be slightly further into the year once restructuring in the mining sector really got under way and the credit slowdown came home to roost more obviously.
"This data reinforces our view that there is no demand side pressure in CPI and hence there is theoretical room to cut rates, although obviously that room is blocked currently by wage-inflation worries and the currency," said Nomura economist Peter Attard Montalto.
The rand weakened to R9.1925 against the dollar by 11:10 GMT from R9.1796 before the data was released at 11:00 GMT.
The yield on the 2026 benchmark bond nudged up half a basis point to 7.435% while that for the shorter-dated 2015 issue was unchanged at 5.4%.
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 quarterly bulletin this week.
Statistics South Africa has drawn recent months' data from a fresh 2012 sample, replacing the previous year's sample.
Retailers down
Shares of major South African retailers, including Woolworths and Mr Price took a beating after official data shows a slowdown in retail sales in January.
Clothing and food retailer Woolworths Holdings [JSE:WHL] lead decliners on the benchmark Top 40 - (Tradeable) [JSE:J200] index, dropping 3.4% to R69, while Mr Price [JSE:MPC] which is due to be dropped from the benchmark index following recent steep losses, fell 2.5% to R117.03.
The sector has been under a heavy selling pressure this year on concerns that it overvalued after a spate of sales updates and results failed to meet market expectations.
With about three quarters of retailers having reported their results so far this earnings season, around 88% lagged behind consensus and just over 10% met or beat expectations, according to data from Thomson Reuters StarMine.