South Africa’s retail sales fell 5.3 percent year-on-year in March, official data showed on Wednesday, showing consumers are struggling and the economy may already be in recession.
Statistics South Africa said sales deteriorated from a slightly revised contraction of 4.4 percent in February, and the key measure of consumer spending was down 2.9 percent in the first quarter, compared with the same period a year ago.
Consumers have been struggling after the central bank raised interest rates by a cumulative 5 percentage points between June 2006 and June 2008.
Although interest rates started coming down in December, households are still weighed down by high debt levels, while a global downturn has hit output and led to job losses.
“The sharply lower retail sales figures now reflect probably a combination of still-high debt levels and, now, concerns about job security and rising unemployment,” said Carmen Altenkirch, economist at Nedbank.
The central bank has cut the repo rate by 350 basis points to 8.5 percent since December and is seen cutting rates further, with the economy already seen in its first recession since 1992 after poor manufacturing and mining data for the first quarter.
It shrank by 1.8 percent in the fourth quarter, the first contraction in 10 years.
Official figures on Tuesday showed manufacturing output fell by 11.7 percent, following a record 15.1 percent drop the previous month.
“(The retail sales data) just supports our expectation that the first quarter GDP number is going to be terrible and far worse than the numbers at the end of last year,” said Elna Moolman, economist at Barnard Jacobs Mellet.
“It basically confirms that a recession is inevitable.”
Stats S.A. will release second quarter GDP data on May 26, with a weak number bolstering the case for another aggressive interest rate cut on May 28.
The rand was little changed at 8.3715 against the dollar at 0955 GMT, from 8.3666 before the data was released at 0930 GMT. The benchmark 2015 bond Reuters.