South Africa Retail Sales Slow on Inflation, Jobless Rate

South African retail-sales growth slowed in March from a year earlier as inflation remained close to the top of the central bank’s target and a 25 percent jobless rate hurt consumer spending.

Retail sales rose 2.8 percent from a revised 3.9 percent in February, Pretoria-based Statistics South Africa said on its website today. The median estimate in a Bloomberg survey of 16 economists was 2.4 percent. Sales fell 0.9 percent in the month.

“It’s an early warning signal of the slowdown we expect to happen in the second quarter,” Peter Attard Montalto, an economist at Nomura Plc in London, said in an e-mailed response to questions.

Consumer confidence slumped to a nine-year low and demand for credit fell to the lowest level in about a year in March as inflation hovered near the top of the Reserve Bank’s 3 percent to 6 percent target.

The Reserve Bank will probably hold the benchmark borrowing rate at 5 percent next week, according to the median estimate of 10 analysts in a Bloomberg survey. The FNB/BER consumer confidence index dropped to minus 7, the lowest in nine years, in the first quarter.

Today’s data gives no reason for the central bank to move out of its “comfort zone” on interest rates, Montalto said.

Yields on benchmark government bonds due December 2026 rose six basis points, or 0.06 percentage point, to 6.85 percent by 2:03 p.m. in Johannesburg, according to data compiled by Bloomberg. The rand fell 0.7 percent to 9.3057 against the dollar.