The release of the retail sales data, which came out yesterday, coincided with inflation figures that showed it had risen slightly. However, core inflation - which strips out food, petrol and energy costs - has decelerated.
Workers, including 1.3-million public servants, got above-inflation wage increases this year and this could have had a good effect on retail activity and explain why there has been positive sales growth.
In addition, the combination of inflation meeting expectations and its core equivalent slowing could present a strong case against hiking interest rates next month.
Retail sales rose 3.3% year on year in October, after a 3% rise in September. The expected increase was 2.5%. Inflation rose to 4.8% year on year in November, from 4.7% in October, in line with forecasts, Statistics SA data show.
Retail sales are expected to perform well this festive season and into the New Year, but growth is expected to be modest because of cooling household spending, which slumped to 0.9% in the third quarter from 1.2% in the second.
Capital Economics Africa economist John Ashbourne said: "The higher interest rates, elevated inflation and the weakening rand will force consumers to tighten their belts in 2016, chocking off a key source of demand."
The Reserve Bank raised rates last month to address rising inflation, which it expects to breach the 3%-6% target in the first and fourth quarters of next year. Future interest-rate hikes would depend more on how the rand performs, Lefika Securities economist Colen Garrow said. The Bank would want to "move proactively to keep the SA-US interest rate differential wide enough to attract capital".
Core inflation slowed to 5.1% year on year last month, from 5.2% in October. Inflation was up 0.1% during the month.
Food was the main contributor to the monthly increase. The drought is expected to fuel food price increases. "The items with the highest monthly rates were fruit (4.8%) and oils and fats (1.5%)," according to Statistics SA.
Goods inflation rose 3.8% year on year last month compared with a 3.7% increase in October, while services inflation increased 5.7% year on year compared with a 5.6% rise in October.
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