No retail therapy for a while
September 23, 2008
Johannesburg - Consumer demand is unlikely to pick up in the short term, Nedbank group's economic unit said on Tuesday.
This followed the release of retail sales data earlier by Statistics SA.
The statistics agency said that retail sales at constant prices fell by 4.6 percent in July 2008 compared with July 2007.
"While the peak in inflation seems near, it remains higher and continues to erode purchasing power."
Nedbank said that equally, debt service costs remained high, while access to refinance and new credit was limited due to stricter lending criteria.
"Demand for durable and semi-durable goods will be mostly affected," Nedbank added.
The economy was weakening. Evidence included a persistent decline in retail and vehicle sales, combined with slower growth of consumer credit and manufacturing output, Nedbank said.
Inflation, which was a priority for the Reserve Bank, was expected to have peaked in August.
"Therefore, there will be no reason for the MPC to hike rates again.
"We expect the MPC to start cutting rates in April next year when the Reserve Bank has more evidence of energy and food prices being firmly on a downward trend and of generalised price pressures having begun to abate," Nedbank said. - Sapa
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