Consumers won't splash the cash, yet

By Staff Writer

While retail sales might have increased in February for the first time in more than a year, experts don't expect South Africans to start splashing the cash just yet.

It's expected that retail sales might have risen by 0.6% when compared to February last year after they took a dive by 1.7% in January according to a consensus forecast from both Reuters and Bloomberg.

"I think that retail sales should get stronger this year in line with other consumption indicators like vehicle sales, which are starting to run hard ahead of the Soccer World Cup," said Brait economist Colen Garrow.

"But the sustainability of the trend remains tenuous, as the economy is still undermined by the significant job losses last year. That will in turn hinder a more robust recovery in household consumption spending this year," he said.

The surprise interest rate cut by the Reserve Bank could motive consumers to spend more and with the World Cup around the corner, people will be spending on memorabilia, replica soccer shirts and other items to commemorate the event.

However, many households are still faced with heavy debt burdens following 2009's recession and job losses, these are all aspects which will constrain the sector.

Households who are still struggling with debt need to set up a budget and curb any excessive spending in order to get back on track and avoid further headaches.


"These factors first will have to improve before solid increases in retail sales can be expected," Standard Bank said last week.

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