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South African Retail Sales Climb as FIFA World Cup Tourists Fuel Spending
South African retail sales rose at the fastest pace in three years in June as tourists flocked to the soccer World Cup, fueling spending on clothes, food and sports goods.
Sales increased an annual 7.4 percent after gaining a revised 4.5 percent in May, Pretoria-based Statistics South Africa said on its website today. The median estimate of 12 economists surveyed by Bloomberg was for an increase of 7.2 percent. Sales rose a seasonally adjusted 1.8 percent in the month.
The tournament, which ended on July 11, attracted about half a million foreign visitors and may have helped to boost the size of the economy by about 1 percent, according to the Finance Ministry. That helped to offset the impact of job losses and spur consumer spending, which accounts for two-thirds of expenditure in the economy.
“The World Cup had a one-off positive effect on the numbers,” said Ilke Smit, an economist at Metropolitan Asset Managers in Cape Town. “It shouldn’t suggest anything about the health of the economy. We still expect a 50 basis-point rate cut in September.”
The Reserve Bank has cut its benchmark interest rate seven times to 6.5 percent since December 2008 to help pull Africa’s biggest economy out of a recession. Inflation slowed to a four- year low of 4.2 percent in June, adding to expectations that Governor Gill Marcus may lower interest rates on Sept. 9.
Currency Movements
The rand reversed earlier losses, gaining as much as 0.2 percent to 7.2450 against the dollar, from 7.2618 late yesterday. The currency was at 7.2529 to the dollar as of 12:39 p.m. in Johannesburg.
Sales of household furniture and appliances rose an annual 17.7 percent in June, while clothing purchases increased 13 percent, the statistics office said. For the second quarter as a whole, sales rose 4.9 percent from a year ago.
South Africa’s jobless rate rose to 25.3 percent in the second quarter, the highest of 62 countries tracked by Bloomberg, undermining spending. Credit demand by households and businesses increased for a second month in June, gaining 0.9 percent, after contracting since October.
Shoprite Holdings Ltd., South Africa’s biggest grocer, said on July 15 sales rose 10.3 percent in the six months through June 30 from a year ago. Clothing retailer Truworths International Ltd. said on July 16 earnings per share increased as much as 13 percent in the 12 months through June compared with the previous year.
To contact the reporter on this story: Nasreen Seria in Johannesburg at nseria@bloomberg.net.
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