Especially in the second quarter of 2022, when severe floods devastated KwaZulu-Natal and the economic consequences of Ukraine’s war began to emerge.
This is according to the Bureau of Economic Research (BER), who commented on the results of its most recent retail survey, which was performed from February 8 to February 27, 2023.
“Consumers are pinched by high inflation — especially food prices, hurting the sale of non-durable goods — and an elevated interest rate, heavily impacting the sale of durable goods,” the BER stated.
Household furniture, appliances, equipment, and hardware, as well as paint and glass, are examples of durable items.
“In addition, retailers are trying to mitigate load-shedding by spending hard-earned revenue on backup power solutions,” said the BER.
“Anecdotal evidence suggests that many high-income consumers are also investing in backup power, reducing their disposable income.”
According to the BER, retail, wholesale, and motor trade movements indicate information about product demand.
If these sectors decline, it frequently suggests that household spending is constrained or that expenditure on other services such as restaurants, transportation, and real estate has grown.
It might also suggest increased savings as a result of a perceived hazardous environment, as shown during the Covid-19 epidemic.
According to the BER’s trade survey for the first quarter of 2023, the industry is under pressure and battling poor consumer demand.
Retail respondents are currently less confident than they have been since 2009 on average.
Retail confidence fell from 42% to 34% in the first quarter of 2023, falling six percentage points below the long-term average.
The retail business conditions indicator, which decreased from -23 to -41 index points, reinforces the decreasing trend in confidence.
Although it is usual for the first quarter of a year to have fewer sales than the holiday season, merchants forecast lower sales this quarter than the first quarter of previous year.
In reality, retail sales in January were 0.8% lower than at the start of 2022, according to Stats SA.
The results of the BER’s 2023Q1 survey show a continuation of the decline in durable- and non-durable goods sales volumes that began in the fourth quarter of 2022.
Semi-durable items, on the other hand, appear to be holding fast on the strength of a resurgence in clothes and footwear sales.
General dealers, specialised food, beverage, and tobacco merchants, and retailers of pharmaceutical and medical items, cosmetics, and toiletries are all examples of non-durable goods retailers.
Textiles, apparel, footwear, and leather items are examples of semi-durable goods.
“On a positive note, the purchase and selling price indices for retail goods (on aggregate) confirm that although price levels remain high (as confirmed by February’s CPI data), price increases may be tapering,” the BER said.
“Food price inflation, however, remains sticky.”
