Lihle Mtshali

Lihle Mtshali

The introduction of the National Credit Act in June braked South Africa's shopping spree, but probably not enough to save households from another interest rate increase today.

Statistics South Africa reported that retail spending growth had slowed to 6,4percent in June from May's 9,2 percent.

This slowdown is unlikely to be enough to dissuade Reserve Bank governor Tito Mboweni from announcing a 50 basis point interest rate increase when he informs the public of the Monetary Policy Committee's decision at 3pm this afternoon.

The Reserve Bank's repo rate is expected to rise to 10percent and the prime rate to 13,5percent.

"Sales are still rising, just not as quickly as they used to and there has been a slowdown in retail sales since last November," said Gina Schoeman, an economist at Macquarie First South Securities.

Furniture, appliances and equipment retailers, which contribute 8percent towards the total retail sales, experienced a 13,5percent slump in sales compared to June last year.

The major contributors to the 14,3percent increase for the second quarter of 2007 compared with the second quarter of 2006 were general dealers.

Standard Bank economist Johan Botha said: "Although quite volatile, the resilience of retail sales is surprising. Today's numbers are unlikely to have a major impact on the interest rate decision that the Monetary Policy Committee will take."