[South Africa] Retail industry growth surges as consumers benefit from moderating inflation, Mastercard report
Nominal retail sales for August 2017 grew a substantial 8.1 percent versus the same month last year, marking the quickest pace of growth the retail industry has seen in the past three months.
This is according to the Mastercard SpendingPulse™ August 2017 report, which provides a macroeconomic analysis of retail spending trends in South Africa.
Adjusting for inflation, volume retail sales for August increased 3.7 percent year-over-year, representing the strongest monthly growth in over four years. Compared to July 2017, August nominal retail sales grew two percent while inflation-adjusted sales grew at a similar rate of 1.9 percent.
“August retail sales show an improvement in consumer spending, with South Africans benefiting from a moderation in inflation, and some recovery in industries such as agriculture and mining,” says Sarah Quinlan, Senior Vice President and Group Head of Market Insights for Mastercard.
Over the last 12 months, inflation-adjusted retail sales rose 0.6 percent in line with GDP growth, which is forecast to increase to 0.7 percent in 2017.
“With unemployment reported at 27.7 percent in the second quarter, South African consumers are still under pressure. Despite this, they are showing increased resilience as SpendingPulse August 2017 data points to the third month of improving retail sales. A resurgence of consumer spending in South Africa could help spark wider economic growth and encourage businesses and government to also start investing,” she says.
Looking at specific retail sectors, General Dealer nominal sales grew 10.5 percent for the month versus August 2016, with inflation adjusted sales rising by 2.7 percent for the same period.
“August sales in the General Dealer segment have shown the highest growth since November 2015, indicating that consumers are slowly starting to increase their spending on essentials such as food and household items,” says Quinlan.
While Pharmaceutical, Medical Goods, Cosmetic and Toiletry sales in August declined compared to July 2017, August year-over-year nominal sales did show positive growth of 7.6 percent, with inflation adjusted figures growing by a slight 0.4 percent.
Mastercard SpendingPulse South Africa reports on national retail sales and uses aggregated and anonymous Mastercard transaction data, coupled with survey-based estimates for other payment forms including cash and cheque.
Reports are released monthly to subscribers ahead of other sources, providing timely, accurate, and unbiased insight into the South African economy. The report also includes an overall retail sales and price index to illustrate whether spending growth is being driven by increased shopping, inflation or increased promotions.