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JOHANNESBURG Dec 14 South African retail sales
unexpectedly fell for the first time this year in October, data
showed on Wednesday, suggesting the central bank might continue
to hold off raising interest rates in January to take pressure
off the economy.
The South African Reserve Bank has hiked the benchmark repo
by a total of 200 basis points since early 2014, but has kept it
unchanged at 7 percent since the last increase in March as
economic growth, traditionally been driven by consumer demand,
On Wednesday, Statistics South Africa said retail sales were
down 0.2 percent year-on-year in October following a revised
increase of 1.6 percent in September.
Analysts polled by Reuters had forecast a 0.8 percent
year-on-year increase in October.
The rand extended losses against the dollar after
the data, hitting a session low of 13.6900, as investors moved
to price out a rate hike in January which in theory would be
On a month-on-month basis, sales fell by 0.7 percent, but
ticked up 0.5 percent in the three months to October compared
with the same period last year.
"Retail sales falling to their lowest levels in over two
years will have heightened the concerns held by Finance Minister
Pravin Gordhan about the health of the South African economy,"
said Dennis de Jong, managing director at UFX.com.
"The sector appears to have fallen to its knees, and in the
economy's current state it's hard to see sales rebounding
In October, Gordhan cut the 2016 economic growth forecast to
0.5 percent from 0.9 percent, highlighting the woes of an
economy hit by waning investor sentiment since President Jacob
Zuma unexpectedly fired former finance minister Nhlanhla Nene
On Tuesday, the International Monetary Fund said domestic
factors such as perceptions of weakening governance and
uncertainty about policy direction, would weigh on South
Africa's economic growth next year.
Investors are worried about whether the government can
implement policies to boost growth amid a probe into Gordhan for
his role in setting up a unit at the tax department that police
say illegally spied on politicians. Gordhan has denied any
In October, state prosecutors dropped fraud charges against
Gordhan, in a case that rocked financial markets and drew
accusations of political meddling.
(Reporting by Stella Mapenzauswa; Editing by James Macharia)