"A key call we have had this year is that household balance sheets have not been as badly hit as many people think.
"Yes, they are under a lot of stress given previous high inflation and rates, but the comparison should be versus the manufacturing sector, and for households there is still positive nominal credit growth, large real wage hikes and unemployment mainly affecting unskilled labour, with skilled and semi-skilled employment still up year-on-year," he says.
"This data point will be important for the central bank given their concentration on consumption.
Also key is that while South Africa's recession is indeed lagging the rest of the world, it is not going to necessarily be of greater length than similar emerging markets," he adds.
Attard Montalto feels retail sales should continue to improve from here in the coming months given the pass-through of previous interest rate cuts.
"Though with the stresses that do exist on households we are unlikely to see the previous rapid growth rates of 10-15% in the medium term".
"We continue to see rates unchanged tomorrow at 7.00% after this number, assuming no big surprises from CPI," concludes Attard Montalto.
South African retail trade sales at constant (2008) prices for July were recorded at 3.9% year-on-year (y/y) from a revised 6.9% ( 6.7%) in June, figures released on Monday by Statistics South Africa show.
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