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Standard Bank Group
The SA Daily 14 May 2018

Retail sales trending up

  • Retail sales data for March is due out this week; Bloomberg expectations are for it to have moderated slightly to 4.4% y/y, from 4.9% y/y in February. January to February YTD retail sales grew 4.1% y/y, significantly stronger than the contraction of 1.4% y/y over the same period in 2017.
  • Retail sales account for a significant proportion of household consumption expenditure (HCE); and, retail sales have been recording growth above the long-term trend. This therefore flags robust HCE over the medium term; we expect HCE to average 2.1% in 2018 and 2.3% in 2019, underpinned by robust real wage growth from lower inflation; monetary policy easing by the SARB; and reasonable household credit growth.
  • An improvement in sentiment should also support HCE growth over the near- to medium term. One of the downside risks though is the recent increase in VAT to 15%, and the other taxes announced in the 2018 Budget, which could drag down retail sales volumes growth.

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