South Africa: Shoppers Surprise Economists With Stronger-Than-Expected Spending

Retail sales in July grew by 2.8% compared to a year earlier, beating economists' expectations of a much smaller increase.

Furniture, appliances and equipment retailers saw the strongest growth, while June's figures were also revised upward.

South Africans spent more money in shops in July than economists had expected, according to new figures released by Stats SA today.

Retail trade sales grew 2.8% compared to the same month last year. That's a stronger result than analysts had predicted, Standard Bank had expected growth of just 0.7%, while a wider survey of economists expected around 2%. June's figures were also revised up, from an earlier estimate to 2.4%.

The biggest driver of growth was spending on household furniture, appliances and equipment, which saw the highest annual growth rate of any retail category. This comes at a time when the wider economy has been under real pressure, South Africa's GDP actually shrank in the second quarter of this year, and inflation has been ticking up because of rising fuel prices.

That contrast is worth sitting with for a moment. Even as the overall economy contracts and household budgets are squeezed by higher fuel and food costs, people are still finding money to spend in shops, and spending more than expected. It doesn't mean things have suddenly become easier for everyone, but it does suggest South African consumers have held up more resiliently than economists predicted going into the second half of the year.

This data adds to the picture the Reserve Bank will be weighing when it makes its next interest rate decision on 23 September. Stronger retail sales, alongside Thursday's Consumer Confidence Index, will help paint a fuller picture of how South African households are actually coping right now.

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