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The SA Daily 15 January 2020

November retail likely up

Shireen Darmalingam

  • November retail sales likely surpassed that of October, although likely still subdued. Bloomberg consensus foresees 0.7% y/y, from 0.3% y/y in October; the data is due out later today.
  • Consumer spending has partly been supported by real income growth from benign inflation, with CPI expected at 4.4% in 2020, as well as still modest growth in credit extension. Spending will continue to be supported by real income growth, with higher-income earners still driving spending. The widely expected 25 bps interest rate cut in 2020 should also support consumers.
  • However, consumers still face a higher tax burden, rising unemployment, labour market uncertainties such as skilled emigration, and depressed confidence. Consumer confidence was just -7 pts in Q4:19, the same as in Q3, and also the lowest since Q4:17, with power cuts in 2019 decimating confidence.
  • We nevertheless expect retail sales and overall household consumption expenditure to pick up in 2020 despite consumer confidence so poor because of SA’s supply electricity crisis.
  • We expect household consumption expenditure to increase by 1.2% y/y in 2020, from an estimate of 1.1% y/y in 2019.

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