In October, retail sales in South Africa saw an unexpected boost, reaching their highest point in over two years. This trend raises optimistic expectations for the economy’s future growth.

General dealers played a key role in this sales uplift, reporting a 6.3% increase in October compared to the same month last year, up from a mere 1.1% the previous month, as per the latest report from Statistics SA released on Wednesday. This figure exceeded the median forecast of 2% from three economists surveyed by Bloomberg. On a month-to-month basis, sales increased by 1.6%.

Retailers are likely to maintain this growth trend, buoyed by improved consumer sentiment among affluent individuals, falling interest rates, stable inflation, and pension reforms that offer savers earlier access to some of their retirement funds.

Since September, the central bank has lowered interest rates by 50 basis points, bringing the policy benchmark to 7.75%, while inflation is currently at 2.9%.

“Although consumer confidence dipped slightly in the fourth quarter of 2024, there is a noticeable increase in consumers’ willingness to spend,” remarked Jee-A van der Linde, a senior economist at Oxford Economics. “We expect consumers’ spending power to strengthen further in 2025, though at a gradual pace.”

© 2024 Bloomberg L.P.

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