Bureau for Economic Research: Retail confidence shows resilience in Q3

Inflationary pressures in South Africa are showing positive signs of easing, according to the latest report by the Bureau for Economic Research measuring retail confidence and trade in the third quarter. The Senior Economist at the Bureau for Economic Research, Helanya Fourie, highlighted that while inflation remains at incredibly high levels, there are early indications that the rate of selling and purchase price increases for non-durable goods might be reaching a turning point. The report suggests that retailers are starting to see signs of a slower rate of inflation, particularly in non-durable goods, semi-durable goods, and durable goods. Fourie explained that the Bureau's indices show that the majority of respondents still reported higher rates of selling and purchase price increases compared to the previous year. However, the margin of respondents indicating higher rates has decreased from the previous quarter, indicating a potential shift in the right direction. Looking ahead to the fourth quarter, respondents across the board expect the rate of price increases to be slightly slower, hinting at a positive trend in the coming months. The survey also considered the impact of imported inflation on retailers in South Africa. While the survey does not specifically ask about imported inflation, respondents' answers on purchase prices are likely influenced by factors such as high food prices and global pricing pressures. Fourie noted that fluctuations in the oil price have been encouraging, with the purchase price index showing a potential decrease in the rate of purchase price increases. As South Africa awaits the latest consumer price inflation numbers, Fourie highlighted that the results are eagerly anticipated. While the Bureau's results may not directly impact the South African Reserve Bank's interest rate decisions, they contribute to the broader information pool that the bank considers. The Bureau's expectation is for a 75 basis point interest rate hike, in line with similar actions by other central banks and considering the current currency dynamics. Looking ahead to the Reserve Bank's decision later in the week, Fourie acknowledged the possibility of unforeseen outcomes, with some speculating on a potential higher interest rate hike depending on global economic developments. Ultimately, the report from the Bureau for Economic Research provides a glimmer of hope amidst ongoing inflationary challenges, suggesting a shift towards a more favorable economic outlook for South Africa.