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Woolworths Leads Retail Slump on Inflation: Johannesburg Mover

June 6 (Bloomberg) -- Woolworths Holdings Ltd. led the biggest two-day drop in South African retail stocks in more than four months as inflationary risks hurt the outlook for consumer spending.

The 11-company FTSE/JSE Africa General Retailers Index fell as much as 3.8 percent to 58,535.64, bringing its drop in the last two days to 5.8 percent, the most since Jan. 31. The measure traded 3.3 percent down at 3:32 p.m. in Johannesburg. Woolworths, a food and clothing retailer, fell 5.5 percent.

“Investors are skeptical on the consumer outlook and lofty price-to-earnings, but some shares are just taking everything else down with them,” David Shapiro, a director at Johannesburg-based Sasfin Securities, said by phone. “It’s like hurricane season out there and everything is being blown about.”

The rand’s 15 percent slump against the dollar this year, the worst of 16 major currencies tracked by Bloomberg, is adding to pressure on inflation, which at 5.9 percent was unchanged for a third month in April. The South African Reserve Bank forecasts inflation will peak at an average of 6.1 percent in the third quarter.

Edcon Holdings Pty Ltd., a clothing retailer owned by Boston-based Bain Capital Partners LLC, and Adcock Ingram Holdings Ltd., the South African maker of Panado painkillers and Corenza cold medicine, this week warned that inflation and unemployment in the country will probably weigh on consumer spending.

Adcock fell 1.7 percent. Mr Price Group Ltd., a clothing, furniture and linen retailer, fell 4.1 percent, and clothing vendor The Foschini Group Ltd. dropped 2.8 percent.

To contact the reporter on this story: Janice Kew in Johannesburg at jkew4@bloomberg.net

To contact the editor responsible for this story: Emily Bowers at ebowers1@bloomberg.net

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