Christmas shoppers spent R52 billion in December, meaning retailers suffered their first sales slump in six years after inflation was taken into account.
Retail data released by Statistics SA yesterday showed how severely households were forced to tighten their belts over Christmas by the Reserve Bank's fourth 0.5% interest rate increase last year.
The sales slump vindicated Reserve Bank governor Tito Mboweni's decision to hold interest rates steady last month — despite accelerating inflation.
The downturn in retail sales is similar to manufacturing data released on Tuesday, prompting economists to ask if the Reserve Bank had overdone monetary policy tightening.
Standard Bank economist Johan Botha said: “With growth in retail sales likely to decline further, it is an open question whether monetary authorities waited too long before taking the decision to pause with interest rate hikes.
"A crashing retail sector will not be in the interest of the economy and may force a rethink on the country's monetary policy stance — perhaps necessitating a rate cut in the third quarter of this year.”
Nedbank's economics team forecast the Bank would cut interest rates by 1.5% in the second half of this year, prompted by inflation easing and the economy slowing.
Stats SA revised its November retail sales data from the 0.2% growth originally reported into a 0.2% decline. Retail sales fell a further 0.5% in December last year, which marked the largest fall in retail sales since January 2001.
Worst hit were furniture and appliance shops. Stats SA reported they sold R1.3 billion or 12% less in the last quarter of 2007 than in the same period in 2006, even without accounting for inflation.
Pharmacists fared best, increasing sales by 15%.
Source: The Times
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