The retail sector recorded modest growth in August as lower inflation and interest rates offered some breathing room to stretched consumers.
Data from Stats SA, released on Wednesday, shows that retail trade sales rose by 2.3% year on year in August. The biggest drivers were “other” retailers, which grew 7.9%; hardware, paint and glass stores, up 8.1%; and general dealers, up 0.8%.
However, after adjusting for seasonal factors, sales were down 1.2% month on month, after a strong 2.3% rise in July.
Over the three months to August, retail sales increased 3.2% compared with the same period in 2024. Growth was supported by strong performances from hardware stores, clothing and footwear retailers, and general dealers.
Hardware retailers lead recovery
Meanwhile, the hardware sector continued to stand out, with business confidence improving during the third quarter, according to the Bureau for Economic Research’s latest retail survey.
“This is in line with the results of the BER’s latest [third quarter] retail survey results, which show that confidence among hardware retailers picked up during the quarter,” said Investec economist Lara Hodes.
In contrast, clothing and footwear sales grew modestly at 1.6% year on year, after a stronger second quarter.
“Sentiment among semidurable retailers moved into contractionary territory in the third quarter, with a reading of 40, its lowest recorded level since [the third quarter of 2024],” Hodes said.
Consumers still under pressure
While lower inflation and interest rates have eased pressure on households, the recovery remains fragile. According to PayInc’s net salary index the average real net salary rose 1.5% compared with a year ago. Yet many consumers still rely on high-interest personal loans to cover daily costs, leaving less money for discretionary spending.
Retailers have also had to navigate high electricity costs and ongoing logistical challenges, which continue to weigh on activity across the sector.
Hodes said conditions could improve as global growth concerns ease and domestic demand steadies.
“While uncertainty around tariffs still exists, global growth concerns have eased somewhat. Retail sales are up 4.1% year on year, year to date, with the robust seasonally significant fourth quarter still to come. Household consumption expenditure, which makes up around two-thirds of GDP growth, is expected at 2.5% year on year in 2025,” she said.
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