Clothes sales outstrip groceries

Robert Laing

Robert Laing

Clothes sales jumped 16 percent to R8 billion and furniture 14 percent to R3 billon from September to October.

This rebound in semi-durables and durables came at the expense of food, with grocery tills ringing up R17 billion, which was 2,5 percent down from September.

October's total retail sales of nearly R44 billion were 5 percent higher than September's and 13 percent higher than October last year.

But stripping out inflation, South Africans actually bought 2,3 percent less than a year ago. Real retail growth has been negative in nine of the past 12 months.

Even without taking inflation into account, October's furniture and appliance sales were nearly 7 percent lower than October 2007 despite the jump from September.

Nedbank chief economist Dennis Dykes said: "The latest retail sales numbers show that earlier interest rates hikes are probably having a strong effect on curbing household demand.

"This, coupled with Tuesday's reported drop in manufacturing output, adds to the already compelling evidence of a rapidly slowing economy.

"Inflation has begun to moderate and forecasts suggest that it will fall sharply next year. Given the growing risks to the local and global economic environment, the likely deflationary effect of weak economic activity, as well as the already high level of interest rates, the correct course of action would probably be to cut interest rates sooner rather than later."

Reserve Bank governor Tito Mboweni will announce the monetary policy committee's decision at 3pm today. The majority of economists think he will announce a 0,5 percent cut, which will reduce the prime rate at which banks base home and car loans to 15 percent.