Consumers have been battling the rising cost of living in a high inflation environment and increasing interest rates dragging consumer confidence. The intense load shedding also has an impact on retailers operating hours.
While consumer inflation moderated in January, it was at 6.9% well above the Reserve Bank’s target bracket. On the other hand, unemployment remains high at 32.7%.
Five out of the seven retail categories recorded decreases in sales volumes. The largest negative contributors to this decrease were retailers in food and beverages followed by hardware stores.
“Food and beverages recorded the deepest decline at negative 7.3% year on year and once again we saw clothing and footwear holding the fort in the month of January with an increase in volumes of 2.3% year on year and this category was supported by general dealers who saw their volumes increase by 0.3% year on year. These two categories might have benefited from a back-to-school related spending in the month of January. Looking ahead, we anticipate that the sluggish economic environment, combined with the constant power supply disruptions will weigh on shopping activity in 2023, and as a result we expect that household consumption expenditure should decline from around 2.6% year on year in 2022 to around 1.5% in 2023,” says Siphamandla Mkhwanazi, FNB Senior Economist.
It’s expected that retail trade sales will remain weak in the months to come. This as household finances continue to be under pressure as a result of the rising cost of living and wage increases fail to keep up as companies’ input costs rise as they make arrangements for alternative energy sources as the load shedding drags on.
Source: SABC News (sabcnews.com)