More bad news as retail sector’s growth rate halves

Retail sales growth slowed further in July‚ supporting views that the sector remains under pressure. Retail sales grew 0.8% in July from a year earlier‚ compared with a downwardly revised 1.4% in June. Economists had expected an uptick from June — which marked a surprisingly steep slowdown from 4.5% the month before — but had not expected July’s growth to come in above 2%. Compared with a month earlier‚ retail sales rose 0.4% in July‚ after a 1.9% contraction in June. The year-on-year growth was driven mainly by the textiles‚ clothing and footwear sector (contributing 0.8 percentage points); and by general dealers‚ and pharmaceutical retailers‚ contributing 0.5 percentage points each. Consumers have been under sustained pressure from higher interest rates‚ tighter lending criteria and rising inflation‚ as a severe drought has driven up food prices and rand weakness earlier this year drove up the prices of imports. Some respite has come in the form of falling fuel prices — the petrol price fell 18c a litre in September and 99c in August — but economists have pointed repeatedly to low consumer confidence levels. A survey released earlier this month showed consumers felt more financially vulnerable in the second quarter than they did in the first quarter.