Retail sales rose 3.9% year on year in February, according to data published by Stats SA on Wednesday, though economists cautioned that a 1.3% decline when compared to a month earlier indicated growing pressure on consumers and an uncertain economic environment.
The biggest boosts annually came from textiles, clothing, footwear and leather goods which increased by 15.7% year on year and contributed 2.3 percentage points to overall growth.
General dealers saw an increase of 3.4%, contributing 1.6 percentage points.
However, on a monthly basis, seasonally adjusted retail sales dropped 1.3% after a 0.7% increase in January and no change in December 2024, Stats SA said.
Still, retail trade sales increased by 4.4% in the three months ending February 2025 compared to the same period a year earlier. Again, clothing and footwear retailers led the way with a 10% increase, contributing 1.9 percentage points, followed by general dealers at 4.1%.
Retailers in textiles, clothing, footwear and leather goods were also the top contributors to seasonally adjusted sales growth over the last three months rising 4.6% and adding 0.8 percentage points, said Stats SA.
Standard Bank economist Shireen Darmalingam said the slower annual pace of growth and the monthly decline pointed to mounting pressure on consumers amid an uncertain economic environment.
She said the annual consumption recovery had been supported by easing inflation and interest rate relief which aided credit growth and spending but risks have since escalated due to external shocks such as the US’s sweeping trade tariffs and the prospect of an increase in VAT locally.
The latter two developments have led to an upward revision in inflation forecasts and a delay in a further interest rate cut by the Reserve Bank, Darmalingam said.
“Despite upside risks, inflation is expected to remain within the Bank’s 3-6% target range. We are postponing the final 25 basis point interest rate cut that we foresee in this cycle to the July MPC [Monetary Policy Committee] meeting, given the current risks to inflation and economic growth from tariffs.”
With the Easter holidays approaching FNB expects a further boost in consumer spending, especially in categories such as accommodation, flights, fuel, hardware and clothing. The bank forecasts growth of more than 8% over Easter compared to the same period a year earlier, when spending rose by 7.41% year on year.
FNB also highlighted a major shift in payments over the course of 2024, with online spending rising 47.1% year on year compared to 24.2% growth in in-store spending. Physical card payments dropped by 10.88%, while virtual card payments surged 90.12% just before Easter and by 134% at the holiday peak, the bank said.
“Our customers’ transactional safety both online and in-store is a key concern for us. With Easter being a high-frequency travel and shopping period, our innovative FNB virtual card will be a critical payment method to ensure safe and secured transactions over this time,” said Senzo Nsibande, the bank’s credit card and card platform CEO.
“Our data shows that our customers have come to value the convenience and safety of the FNB Virtual Card and we truly believe that the unprecedented growth that we continue to see in the virtual cards space is testament to the fact that our customers know that they can trust us and our platform as they conveniently transact both in-store and online.”
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