According to Stats SA, this was the eighth month in a row that retail sales declined, following a revised 4.4% in November 2008.
The drop in trade figures is evidence of South African consumers spending less in the current economic climate of high interest rates and diminishing disposable income levels.
“Retail trade sales, at constant (2000) prices, for the fourth quarter of 2008 reflected a decrease of 2.1% compared with the fourth quarter of 2007, while growth for the same period in 2007 was 0.3%,” Stats SA reported.
Retail sales for the year 2008, dropped by 2.2% compared with 2007, Stats SA said, adding that this was the first annual decrease in nine years.
Retail trade sales, at current prices, for the fourth quarter of 2008, increased by 11.9% compared with the fourth quarter of 2007.
The major contributors to this increase were general dealers, retailers in textiles, clothing, footwear and leather goods, retail trade in specialised food, and beverages and tobacco stores.
Retailers in household furniture, appliances and equipment contributed negatively to the change in retail trade sales, Stats SA said.
Retail trade sales, at current prices, for December 2008 also increased by 12.1% compared with December 2007, while sales for the corresponding period in 2007 increased by 9.4%.
The further drop in retail trade figures comes after the Reserve Bank Governor Tito Mboweni announced a 100 basis points cut in the repo rate, earlier this month.
The decision to cut the repo rate, made by the Monetary Policy Committee, was driven by a significant reduction in domestic inflation as well as global economic growth.
The Reserve Bank Governor added that the widening domestic output gap and declining international commodity prices were expected to exert further downward pressure on inflation going forward.
Despite the positive outlook for inflation, South Africa's export market is shrinking at a rapid rate as a result of the global recession and the country's economic growth is going to suffer, he highlighted at the time.
The Consumer Price Index, excluding interest on mortgage bonds, CPIX, which will be replaced by the CPI, excluding owners equivalent rent, on 25 February, has been moderating consistently since August 2008 when it measured 13.6%.
In November and December 2008, inflation had declined to 12.1% and 10.3% respectively.
Electricity, food, and clothing and footwear prices were the main contributors to the inflation outcomes in these months, he said, adding these prices increased at year-on-year (y/y) rates in excess of 15%.
Article published courtesy of BuaNews
