Market consensus expectations were for retail sales to have fallen 2% in January.
However, analysts have warned that, given the historic volatile nature of retail sales data, yesterday's figures should be treated with caution.
On a positive note, and in line with trends, retail price inflation continued to show signs of moderating price pressures, falling to 10.8% annually in January from 12.3% the month before.
“Given that the retail price deflator was as high as 17.7% in August last year, yesterday's number will provide further comfort to the Reserve Bank that past monetary policy actions are having the desired effect in bringing inflation down,” Absa macro strategist Jeffrey Schultz said.
He said as evidenced by the Reserve Bank's decision yesterday to hold an unscheduled monetary policy meeting on Monday and Tuesday next week, the focus of monetary policy was shifting towards the sharp declines in many real economic indicators.
“We look for a substantial front loading of rate cuts, starting with 100 to 150 basis points next week,” Schultz said.
Source: Business Day
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