SA retail sales up by 3% year-on-year

©Dmitriy Shironosov via 123RF

The report shows that inflation in South Africa continued to moderate in May 2018, marking the 17th consecutive month that inflation contributed a declining proportion to overall retail sales growth. Total retail sales growth, including the effects of inflation, grew 5.6% year-on-year, meaning that higher prices contributed only 2.6 percentage points to total growth.

The year-on-year increases in total retail spending, both including and excluding the effects of inflation, are the lowest recorded yet in 2018. This still reflects a healthy outcome for the month since it builds on strong performance in May last year, which showed 2017’s highest monthly retail sales growth including inflation and its fourth-highest monthly growth excluding the effects of inflation.

General dealer sales

The general dealer sector once again underperformed the rest of the retail market. General dealer sales volumes, excluding the effects of inflation, declined 3.5% year-on-year for May 2018. Including the effects of inflation, general dealer sales increased 3.2% year-on-year.

Inflation contributed 6.7 percentage points to general dealer sales growth for the month. This compares to the 7% inflation contributed to growth in April 2018. Food price inflation is declining, but high unemployment and low wage growth appear to be affecting the general dealer sector of the retail market more severely than others.

Pharmaceuticals and personal care

Pharmaceutical, medical goods, cosmetics and toiletry sales volume excluding the effects of inflation grew 6% year-on-on-year for May 2018 – the highest growth rate in 2018. Inflation contributed 3.6 percentage points to growth in this sector.

Sarah Quinlan, senior vice president of Market Insights Mastercard, commented, “The South African consumer is cautiously managing cashflow, diverting some savings from lower food prices to spending on items like cosmetics and toiletries. Though there has been a moderation of inflationary pressures in many economic sectors, a small uptick in oil prices in May, high unemployment and low wage growth continue to restrain spending.”

Quinlan added, “We will continue to track factors like oil prices, private sector credit, impact of currency changes and the global trade situation. If those start to ease, we would expect a rise in retail sales in the future. However, a strengthening US dollar could negatively impact the economy by increasing inflationary pressures, something we will be watching for in the future.”