After going on a spending binge in January, South Africans were hardly flocking to the shops in February. 

Retail trade sales that month fell 0.9% year on year, Statistics South Africa (Stats SA) said on Wednesday. This compared with market expectations of a 1.1% increase. On a seasonally adjusted monthly basis, retail trade was down 0.5% from January. 

Muted demand pressures are no surprise in an economy with an unemployment rate of over 35% that is also grappling with slowly rising interest rates and consumer inflation that is close to 6% and expected to remain on the boil for some time in the face of surging food and fuel prices. 

Still, other data sets have pointed to a reasonable start to 2022 for the South African economy, which grew by 4.9% last year after contracting by 6.4% in 2020. On the retail front, sales rose by 6.4% last year after contracting by 7.1% in 2020 and had got off to a flying start in January 2022, climbing by 7.7% year on year. 

So, it could be the case that February was just a blip and the March read could be stronger. New vehicle sales, for example, have been robust, which is partly a reflection of pent-up demand. And the BankservAfrica Economic Transaction Index (Beti), a measurement of economic transactions between South Africa’s banks calculated by Economists.co.za, reached an all-time high in March of 135.9 index points. 

“The Beti figures correspond to the robust new vehicle sales, the Absa Purchasing Managers’ Index, and other well-performing economic sectors,” said BankservAfrica.  

Other indicators paint a decidedly mixed economic start to 2022. Output in South Africa’s manufacturing sector grew by a paltry 0.2% on a year-on-year basis in February and fell on a monthly basis by 1.1%. 

And domestic retail fuel prices have hit record highs while food inflation remains elevated, not least because of Russia’s war in Ukraine. The South African consumer is becoming hard-pressed. In such an environment, expect consumers to think twice before they open their wallets. DM/BM