By Siphamandla Mkhwanazi
Retail sales growth slowed to 1.3% year-on-year (y/y) in April, down from 2.5% in March (revised from 2.6%) and well below market expectations of a 2.0% expansion. On a month-on-month (m/m) basis, however, sales volumes increased by 0.9%, up from a 0.1% uptick in the previous month. This release provides an early indication of consumer responsiveness to the sharp fuel price increases linked to tensions in the Middle East.
Where are consumers cutting spending?
All but one retail category recorded a slowdown in annual sales growth, pointing to a broad-based moderation in spending momentum. Pressure on specialist food and beverage retailers appears to have eased, with volumes expanding marginally by 0.4% y/y, following a 5.5% decline in the previous month. This marks a break from a four-month streak of contraction.
Clothing and footwear recorded an outright decline of 0.7% y/y, down from a 3.9% expansion previously, suggesting early signs of discretionary spending pressure. General dealers saw growth slow to 0.9% y/y (from 1.7%), while furniture retailers continued to post relatively strong growth of 8.8%, albeit softer than the 10.8% recorded in March.
"Other" retailers also recorded solid growth of 5.0% y/y, though slower than the 7.2% in the prior month, likely reflecting some resilience in e-commerce activity. Growth across the remaining categories was negligible: pharmaceutical and cosmetic retailers expanded by just 0.6% (down sharply from 5.0%), while hardware and building material sales were flat.
Outlook
Consumers entered 2026 on a firmer footing, supported by improving purchasing power, stronger balance sheets, and lower borrowing and debt-servicing costs. This backdrop helped lift consumer sentiment, particularly among higher-income households.
Looking ahead, however, a less supportive external environment and tighter financial conditions are likely to weigh increasingly on domestic demand. Elevated operating costs, particularly via the oil price channel, alongside heightened uncertainty, could compress margins and dampen investment through weaker confidence. In turn, this may translate into softer employment and income growth, constraining household spending.
Encouragingly, recent developments in the oil price suggests a degree of easing in cost pressures. If sustained, this should provide partial relief to consumers and help moderate the extent of the expected slowdown in spending. Nevertheless, consumers are still expected to support GDP growth in 2026, albeit at a slower pace than initially anticipated.
