The BER Retail Survey indicates that the trade sector is showing early signs of possible easing of purchase and selling price pressure. Retail confidence has proven to be surprisingly resilient despite the effect of high inflation and rising interest rates on the disposable income of consumers.
The BER Retail Survey for the third quarter shows that although general business conditions are down relative to the third quarter of 2021, confidence levels remained elevated and above the long-term average.
- Advertisement -
In the survey, 51% of respondents reported that they are satisfied with prevailing business conditions, compared to 49% of respondents in the last quarter, but subcategories in the retail sector reveal varying trends, with confidence among retailers of non-durable goods (food and beverages and pharmaceuticals) most affected by constrained consumer spending.
The BER says elevated confidence levels may partly be driven by the boost of turnover from high selling prices. Sales volumes are down slightly overall from an index value of +5 in the second quarter to +1 in the third quarter, which suggests that prices, rather than volumes, could be driving confidence.
ALSO READ: Business confidence survey shows 61% dissatisfied with business conditions
Sales volumes should be better in retail survey
In addition, sales volumes should be better than in the third quarter of last year for many retailers, as the July retail sales numbers reported by Stats SA last week show robust year-on-year growth. The BER says this is partly due to sales volumes this quarter that compares to a low base, as the third quarter of 2021 was affected by riots and looting, travel restrictions sparked by a severe delta wave of Covid-19 and an alcohol ban that was still in place early in the quarter.
The BER Retail survey also asks respondents whether the rate of increase in average prices is up, down or the same as the previous year. Their answers indicate that while inflationary pressure remains severe, there are early indications that the rate of selling and purchase price increases for non-durable goods might be reaching a turning point.
- Advertisement -
“In addition, it is encouraging that for most categories, the expected rate of selling price increases is down and respondents seem to anticipate a decline in the rate of selling price increases in the fourth quarter, which bodes well for inflation. The results of the BER Wholesale Trade survey suggest a similar trend.”
The BER Motor Trade survey also shows an uptick in confidence among sellers of new vehicles from 29% in the second quarter to 40% in the third quarter, but the BER says the weak confidence levels in the second quarter were affected by the April floods in KwaZulu-Natal and the uptick in confidence is likely part of a normalisation and remains below the long-term average of 46%.
