Data released yesterday showed that South Africa’s retail sales climbed by 3.8% y/y in February, while consensus among economists anticipated a rise of 1.8% y/y.

My take on the retail sales environment was published yesterday morning to clients several hours before Stats SA released the data.

“The rate at which households are going into new debt remains strong, growing by just less than 10% on a rolling four month moving average annualized basis in February. Household credit growth has been running at a clip of 10% y/y since November and has only slowed just barely to growth of 9.8% y/y in February. Even with CPI inflation accelerating to 6% y/y in March, the credit environment indicates there is still positive monetary space to boost retail sales volumes above the current estimated 1.8%.”

That said, there are other developing factors that will temper retail sales growth in coming months and keep growth tepid. Retail won’t crash, but it won’t grow very strongly either.