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SA Oct retail trade sales up year on year
South African retail trade sales at constant (2000) prices for October increased by 1.5% year-on-year compared with September's revised 1.7% (2.0%) increase, according to data released by Statistics South Africa on Wednesday.
Sales of R24.951 billion were recorded in October from the revised R24.693 billion recorded in September.
Analysts said tighter monetary policy and stricter credit rules were likely to place consumer spending under increasing pressure in the months ahead.
Stats SA also reported on Wednesday that retail trade sales at constant (2000) prices for the three months to October showed an increase of 3.2% compared with the three months to October 2006.
Retail trade sales at constant prices for the first 10 months of 2007 increased by 6.5% compared with the first 10 months of 2006.
Investec Group economist Annabel Bishop said that while there was a small statistical base effect, without which October's retail sales growth would have been closer to 2.7% year-on-year, there is also very definite evidence of the dampening effects of higher interest rates.
"The underlying trend continues to be one of gradually moderating growth, which is also reflected by data from the independent Retail Liaison Committee.
Expectations amongst traders, as indicated by the TEI (Trade Expectations Index), point to continued weakening growth."
She added that real retail sales growth is likely to become negative in the last two months of this year due to base effects stemming from the heady retail-spending spree of 2006.
"We are expecting a contraction of 2-4% year-on-year each month, which should continue over Q1.08 but then retail sales growth should turn positive, if weak, year-on-year," Bishop said.
She added that there is a growing risk that the South African Reserve Bank (SARB) will hike interest rates in January on the back of the ongoing deterioration in the short-term inflation outlook and likely further rise in inflation expectations.
"While our official view is that interest rates will remain unchanged at January's MPC meeting, we may change this forecast to one of a 50bp hike if the remaining economic data releases point to further increases in inflationary pressures."
Article via I-Net-Bridge
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