Retail sales show solid growth as consumers benefit from low inflation and fuel prices

Retail trade in South Africa showed stronger-than-expected momentum in May, with sales at constant 2019 prices rising 4.2% compared to the same month last year, according to data released by Statistics South Africa on Wednesday.

The biggest drivers of the improvement were retailers in textiles, clothing, footwear and leather goods, which jumped 12.5% year-on-year, and general dealers, which grew 3.6%.

Dr Elna Moolman, head of South Africa Macroeconomic Research at Standard Bank, said consumer spending remained “reasonably robust” in May. She noted that while nominal retail sales rose 6.3% year-on-year, once inflation is factored in, real growth was still strong.

“There are a couple of tailwinds supporting the consumer at this stage,” said Moolman. “Wage settlements generally remain above inflation, with inflation particularly low over the last couple of months, partly because of lower fuel prices.”

In May, fuel prices were almost 15% lower than the same time last year, giving consumers more breathing room. Interest rates have also been favourable, and Moolman pointed to a renewed increase in two-part retirement withdrawals at the start of the new fiscal year as another contributor to spending resilience.

Over the three months to May 2025, retail trade sales grew by 3.5% compared to the same period a year ago. Again, retailers in textiles, clothing, footwear and leather goods led the way with a 9.5% rise, while general dealers added solid support with a 2.8% increase.

However, when compared to the previous three months, retail sales were flat on a seasonally adjusted basis. Sales at food, beverage and tobacco stores fell 2.2%, while sales at textile and clothing stores dipped 0.4%. These declines were offset somewhat by modest growth in the hardware, paint and glass category, as well as among general dealers and other retailers.

Looking ahead, Moolman expects consumer spending growth to remain reasonably constructive, although she cautions that it could moderate in real terms as inflation starts rising again.

“We remain reasonably constructive about the outlook for consumer spending growth in the coming months,” she said. “But in real or inflation-adjusted terms, it may moderate somewhat, given the expected rise in inflation.”