By Siphamandla Mkhwanazi
Retail sales growth strengthened to 3.1% y/y in September, up from 2.2% in August (revised down from 2.3%). This was marginally below market expectations of a 3.2% increase. On a month-on-month basis, volume sales were flat. However, total sales volumes rose 0.9% q/q in 3Q25, improving from 0.6% in 2Q25. This indicates that retail activity made a positive contribution to GDP growth in the third quarter.
The resilience in retail, particularly in non-essential categories, reflects improving household purchasing power and stronger balance sheets, supported by less restrictive monetary policy.
Performance by type of retail shops
Growth was broad-based across most retail segments in September, with several categories showing notable strength. Household Furniture retailers led the gains with an impressive 11.4% increase, signalling robust demand for durable goods and home improvement items. Pharmaceuticals followed with a solid 4.0% rise, indicating improved health-related spending in the last few months. Hardware stores also posted a healthy 3.9% growth, suggesting continued investment in home maintenance and renovations. General Dealers, which account for approximately 44% of total retail trade, recorded a more modest but positive increase of 1.9%, reinforcing their role as a stabilising force in overall retail activity. Meanwhile, specialised Food and Beverages shops managed a 1.0% recovery after four consecutive months of volume declines, indicating tentative signs of improvement in this segment.
Outlook
Retail sales are expected to maintain positive momentum in the near term, underpinned by stronger household balance sheets, improving purchasing power, and a monetary policy stance that should be more neutral. Additionally, the recently announced above- inflation, multi-year wage agreements across key sectors will provide a meaningful boost to disposable income, supporting both discretionary and staple purchases. Retail activity should contribute positively to overall economic performance through year-end and into early 2026.
