On a year-on-year basis, retail trade sales grew by 10.4% in June, moderating from 16.3% in May and 95.7% in April. These numbers all need to be taken with a big pinch of salt. April last year was the initial and hardest month of lockdown, when only groceries and other basic necessities could be purchased and the economy was in free fall. As 2021 progresses, expect the year-on-year growth figures to slow further.

On a monthly basis, retail trade sales rose by 0.6% from June, a trend which FNB senior economist Siphamandla Mkhwanazi noted was “a more meaningful measure under the circumstances and crucial for the calculation of quarterly GDP growth”. This was also a moderation from May, when 2.3% growth was posted on a monthly basis after April’s 0.5% decline. 

“This suggests a quarter-on-quarter seasonally adjusted volume increase of 0.7% in 2Q21, much lower than the 1.8% q/q increase in 1Q21. The third wave of Covid-19 infections, termination of fiscal support to vulnerable households and a decline in consumer confidence likely contributed to the deceleration in shopping activity in 2Q21,” Mkhwanazi said in a commentary on the data.

This also signals that demand pressures in the economy remain flaccid, which helps to explain the moderation in July inflation to 4.6% in July from 4.9% in June. Read here. 

Speaking of July, the retail trade numbers from that month are likely to be a train wreck because of the third wave of Covid infections, lockdown restrictions, and the wave of looting and rioting in Gauteng and KZN.

“Looking ahead, retail sales, the July figure more specifically, are set for a bumpy ride. Restrictions, especially the alcohol sales ban, will severely affect retail sales in coming months. The recent rioting and looting in Gauteng and KwaZulu-Natal will also have a massive impact on retail sales, as shops were ransacked and many retailers decided to close shop for a couple of days,” Pieter du Preez of NKC African Economics said in a note. 

Much of the almost R120-million in cash that was stolen from banks and ATMs during the flare up is likely to be spent and so will find its way into the coffers of retailers. But that will hardly compensate for the overall loss of sales volumes. DM/BM