The latest data on retail sales and consumer confidence in South Africa, expected this week, is projected to show constrained household budgets. Analysts forecast moderate growth in retail sales for the third quarter, but consumer confidence, according to Investec economist, is expected to remain in negative territory.
Retail sales data for July will be published by Statistics South Africa (Stats SA) on Wednesday, September 16, while the FNB/BER Consumer Confidence Index for the third quarter of 2026 is anticipated on September 17. Forecasts suggest a modest increase in retail sales of 0.3% year-on-year at the start of the third quarter, which is lower than the 1.6% recorded in June. Meanwhile, consumer confidence, according to Lara Hodges from Investec, is expected to be around -20, compared to -19 and -7 in the previous two quarters.
Lara Hodges noted that inflationary pressure, caused by inflation exceeding the SARB's target, has reduced real wages. This, combined with rising unemployment and persistent geopolitical instability, continues to negatively affect confidence and consumer spending. Furthermore, increased uncertainty and oil price volatility are likely to maintain consumer caution in the near term.
Given the inflationary pressure stemming from the Middle East war, as well as projected record fuel prices in October and expected additional inflationary consequences, there is growing sentiment that South Africa may raise interest rates later this month. Economists predict a 25 basis point hike at the MPC meeting on November 23.
The SARB has so far maintained a cautious approach regarding the oil price shock and its impact on fuel prices and inflation. It previously raised interest rates by 25 basis points in May but kept them unchanged at the April and July MPC meetings.
The depreciation of the rand is also intensifying uncertainty; the local currency fell to 16.25 per US dollar on Monday, after dropping 1% to 16.20 at the end of last week. Bianca Bothes, Managing Director of Citadel Global, believes the currency is under pressure from multiple sides, including the strengthening dollar, the oil shock, weakening gold, and domestic fragility such as the Q2 GDP contraction and sharp drop in mineral production.