South African consumers lift discretionary spending, Mastercard report
Total South African retail sales for April 2018 grew by 3.7 percent year-on-year after removing the effects of inflation, showing the highest growth rate seen in April in the past six years.
This is according to the Mastercard SpendingPulse April 2018 report, which provides a macroeconomic analysis of retail spending trends in South Africa.
The health of retail performance for April 2018 follows a strong first quarter for the South African retail market.
Total retail sales including the impact of inflation climbed 6.4 percent year-on-year. Inflation contributed just 2.7 percentage points to retail sales – the lowest inflation contribution since SpendingPulse measurement began, which demonstrates real economic growth.
The average growth rate in the past three months was 3.7%, which is higher than the 3.3% year-on-year growth from the fourth quarter in 2017.
Sarah Quinlan, Senior Vice President of Market Insights at Mastercard, comments: “While optimism was very high last quarter, the South African consumer is currently in a wait-and-see mode, and has compartmentalised their spending with certain sectors like pharmaceuticals, medical goods, cosmetics and toiletries seeing an uptick in spend, with others like general dealers declining versus a year ago.
Though there has been a moderation of inflationary pressures in many economic sectors, other factors like high unemployment and low wage growth continue to restrain spending.”
Quinlan added: “In the coming days, we will keep an eye on many factors such as the uptick in oil prices, the weakening of private sector credit, impact of the recent VAT hike and the strengthening ZAR. If those start to ease we would expect a rise in retail sales in the future.”