Retail sales growth slows in June amid mixed consumer sentiment

South Africa's retail sector has experienced a modest uptick in sales, reporting a year-on-year increase of 1.6% in June 2025. This figure marks a notable moderation from the robust 4.3% surge witnessed in May, according to Statistics South Africa.

The latest data highlight a mixed performance across various retail categories. Sales for textiles, clothing, footwear, and leather goods saw a decrease, alongside a decline in food, beverages, tobacco, and general dealers.

Conversely, other sectors showed promising gains. Retailers of household furniture, appliances, and equipment; pharmaceuticals and medical goods; as well as cosmetics and toiletries, reported a remarkable increase of 4.2% compared to previous figures, signalling consumer preference shifts.

Moreover, hardware, paint, and glass products also experienced growth, indicating that while some segments of the retail market faced challenges, others thrived amidst an evolving economic landscape.

On a quarterly basis, seasonally adjusted retail sales rose by 0.9% in the second quarter, suggesting a positive contribution to the country’s Gross Domestic Product (GDP) for the period. While retail sales remained flat monthly, the overall trade advanced by 3.7% compared to the second quarter of the previous year, reflecting resilience in certain retail segments.

Investec economist Lara Hodes attributed part of this growth to a favourable economic backdrop for consumers, characterised by low inflation and recent monetary easing. A further interest rate cut announced in July has seen a cumulative decrease of 125 basis points since the easing cycle commenced, which has placed more disposable income in consumers' hands.

“Real take-home pay, adjusted for inflation, is still notably up on year-ago levels,” Hodes noted, referencing data from BankservAfrica. However, she cautioned that domestic challenges and global uncertainties have taken a toll on consumer confidence, which remains subdued.

Hodes highlighted that unemployment has picked up slightly in the second quarter, with the rate increasing by 0.3% quarter-on-quarter to reach an elevated 33.2%. The combination of these factors illustrates a nuanced picture for South African consumers; while some are reaping the benefits of economic conditions, others are still grappling with job insecurity.

The latest retail data thus serves as a reminder of the mixed realities facing South Africans. As the economy navigates through both local and global challenges, consumers remain cautiously optimistic yet uncertain about the future of their financial wellbeing.

BUSINESS REPORT