Interest rates and National Credit Act slow spending

Lihle Z Mtshali

Lihle Z Mtshali

Growth in retail trade sales, the main measure of consumer demand, slowed in July in what analysts said was an indication of a slowdown in household spending.

After a week's delay Statistics SA (Stats SA) released the July retail trade sales figures yesterday, which showed a 4,9percent increase in recorded sales in the retail sector, down from a revised 7,1percent increase in June.

Econometrix economist George Glynos said: "This is an indication that high interest rates and the National Credit Act have exerted a bit of pressure on household spending.

"It also shows a reduction in household disposable income."

Glynos said this data should work in favour of the Reserve Bank leaving interest rates unchanged, but this would not necessarily be the case as the data was not soft enough to give a strong enough argument.

The Monetary Policy Committee will meet on October 11 when consumers will find out if they are in for another interest rate hike.

Also released by Stats SA yesterday were July figures for wholesale trade sales and civil summonses for debt.

Stats SA reported that wholesale trade sales for July increased by 3,8percent to R43billion from the 3,5percent growth recorded in June this year.

The civil service strike in June affected the administration of civil cases for debt negatively, resulting in a 3,8percent decrease in the total number of civil summonses issued for debt for the three months ended in July compared with the same period last year.