South Africa’s retail sales growth accelerated to a higher-than-expected 13-month peak of 4.2% y/y in February from a revised 1.9% y/y the month before, preliminary data* from Statistics South Africa showed. The oil price slump that pushed down consumer price inflation, leaving households with more money to spend, likely contributed to the significant strengthening in retail sales growth. Consensus estimates were for a 2.2% growth, according to a Reuters poll.

Six of the seven segments reported positive annual growth rates, with the highest being for retailers in hardware, paint and glass (+9%), followed by food retailers (+6%). On the other hand, retailers in household furniture, appliances and equipment saw their sales falling 4.1%.

The main contributor to the overall retail sales growth in February were general dealers (contribution of 2pp), trailed by retailers in hardware, paint and glass (contribution of 0.7pp), while retailers in household furniture, appliances and equipment contributed -0.2pp.

On a seasonally adjusted basis, retail sales grew 1.9% m/m, reversing a 0.2% m/m decline in January. In the three months to end- February, sales rose 0.9% compared with the previous three months.

South Africa’s retail sales grew 2.4% last year, at the lowest rate since 2009. The country’s retail sales growth slowed to 2.5% in 2013 from 4.5% in 2012 and 6.1% in 2011. The prospects remain subdued, given the sluggish economy, the high unemployment rate of around 25% and stagnant job markets, high indebtedness with household debt at about 78% of disposable income, and tightening credit standards.

*The data is not seasonally adjusted and measures retail sales developments in real terms at constant 2012 prices.