Retail trade sales surprise in December

Stats SA said the highest annual growth rate was recorded for retailers in pharmaceutical and medical goods cosmetics and toiletries, followed by retailers in household furniture, appliances and equipment.

"Retail sales came out stronger than expected in December, rising by 8.3% year-on-year from an upwardly revised 8% in the previous month, and against market forecast of 7.7%. Over the month, sales rose by seasonally adjusted 1.6%, mainly benefiting from discounted retail prices and the increase in consumer spending during the festive season," Nedbank economists said on Wednesday.

In 2010, retail sales increased by 5.2% with 2009, while sales for the fourth quarter of 2010 increased by 7.7% year-on-year. The main contributors to the of 7.7% increase were general dealers, retailers in textiles, clothing, footwear and leather goods, retailers in pharmaceutical and medical goods, cosmetics and toiletries and retailers in household furniture, appliances and equipment.

Nedbank said consumer confidence is likely to improve through the course of 2011 as economic recovery continues and interest rates remain low and prospects for employment improve. It, however, added that the growth rate will moderate in the second half of the year as base effects diminish.

"The figure shows that consumer spending is gathering momentum, but the growth rate is exaggerated by the low base in 2009 and households remain reluctant to use credit. The still hesitant economic recovery is likely to keep interest rates at current low levels until early 2012 despite mounting inflationary pressure from rising food and fuel price," it said.