Retail sales rise above market expectation

The highest annual growth rate was recorded for retailers in household furniture, appliances and equipment.

In June, retail trade sales rose to a revised 2.4%.

Standard Bank had expected sales to slow down to 0.7% year-on-year, with the Bloomberg census expecting it at 2% year-on-year.

It added that due to consumers feeling less optimistic about prospects for the South African economy, household spending was likely to remain under pressure this quarter.

"The solid growth in retail sales augurs well for the already weak domestic demand. However, given our view that the risks to growth are to the downside coupled with upside risks to inflation, we expect the repo rate to remain unchanged this year," said Standard Bank.

The Reserve Bank's Monetary Policy Committee will make an announcement later today on interest rates. The repo rate currently stands at 5.5% - the lowest rate in 30 years.

Measured in real terms (constant 2008 prices), seasonally adjusted retail trade sales increased by 1.3% in July 2011 compared with June 2011.