Purchases of clothing helped push retail sales for the month of February to a year-on-year gain of 3.9%, an indication that such momentum should help drive some economic growth even if overall gross domestic product (GDP) is being let down by mining and manufacturing.
Retail sales, overall, contribute 20% to the economy, with the wholesale and retail sectors, specifically, being estimated to be the fourth-largest contributors to the country's GDP.
Although Shireen Darmalingam, Standard Bank economist, said in a note that sales on a yearly basis undershot expectations, coming in at 3.9% year-on-year, after having increased by 7% year-on-year in January stripping out the effects of inflation. However, January would have been boosted by back-to-school sales.
Retailers in textiles, clothing, footwear and leather goods gained 15.7%, which contributed 2.3 percentage points to this gain. General dealers gained 3.4%, which added 1.6 percentage points. This is according to a Statistics South Africa print, released on Wednesday.
Investec economist Lara Hodes said that a breakdown of the data indicates that four of the seven categories included in the retail basket increased when compared to the same period last year.
The sector is on an upward trend, with the three months to February 2025 having gained 4,4%, driven by the same sectors that pushed the improvement in the second month of the year. Adjusted for seasonality retail trade sales increased by 1.3% in the three months ended February 2025 compared with the previous three months.
Statistics South Africa’s data, at constant 2019 prices that strips out the effects of inflation, shows a consistent improvement following a massive slump during the
However, on a seasonally adjusted monthly basis, retail sales declined 1.3% in the second month of 2025, which followed a year-on-year drop of 0.7% in January, while December sales – a major push driver for retailers given the festive season – were flat.
Darmalingam said there was a mix of gains and declines across different sectors. “Sales at general dealers and clothing and textile retailers supported overall retail sales in February, while sales of food and beverages and household goods declined,” she said.
Although Standard Bank has postponed its final 0.25 percentage point interest rate cut for the current easing cycle to July from May, consumers will continue to benefit from inflation and interest rate relief, which should continue to support credit growth and spending, Darmalingam said.
South Africa's consumption recovery had largely been underpinned by easing inflation, Darmalingam said. However, she noted that “breakeven inflation is now higher in response to recent tariff hikes and rand weakness. The VAT increase is also expected to lift inflation and impact retail spending this year.”
“The reduction of load-shedding related costs has aided retailers, while consumers have benefitted from a lower inflationary environment, boosting real incomes as well as monetary easing, with 75 basis points’ worth of cuts applied since the start of the easing cycle. Withdrawals from the two-pot retirement system have also supported sales,” said Hodes.
Darmalingam added that, although there is upside risk to the cost of living, inflation is expected to remain within the South African Reserve Bank’s 3-6% target range.
IOL