Retail sales growth in South Africa slowed in February, with early signs pointing to a more subdued consumer environment for the remainder of 2026 as rising fuel costs begin to filter through the economy.
Data from Statistics South Africa shows annual retail sales growth eased to 1.6% in February, down from a revised 4.4% in January.
On a monthly basis, seasonally adjusted sales declined by 1%, reversing gains recorded at the start of the year and indicating weaker underlying demand.
Performance across categories was uneven. Five of the seven major retail groups recorded growth, led by the miscellaneous category, which includes online retail and speciality stores such as jewellery and sports goods. This segment expanded by 9.4% year on year, making the largest contribution to overall growth. Clothing and textiles also supported the topline, rising 3.9%.
However, declines in key segments offset these gains. Food and beverage retailers recorded the sharpest contraction, with sales falling 5% year on year, while general dealers also reported weaker performance. The drop in essential categories suggests mounting pressure on household budgets, as consumers adjust spending in response to rising living costs.
Over a three-month period to February, retail sales increased by 0.5% compared with the previous quarter and by 2.8% year on year, pointing to modest underlying growth despite the monthly volatility.
The latest figures come after a period of relative resilience in consumer demand, supported by improved real incomes, lower debt-servicing costs and stronger household balance sheets. These factors contributed to firmer sentiment entering 2026, particularly among higher-income groups.
That support is expected to weaken in the months ahead. Higher global oil prices, linked to escalating geopolitical tensions, are likely to raise transport and production costs, feeding into broader inflation. This is expected to compress household disposable income and place further strain on discretionary spending.
Economists warn that rising operating costs could also affect businesses, reducing margins and dampening investment. In turn, weaker confidence may weigh on employment and income growth, reinforcing the slowdown in consumption.
Retail remains a key contributor to South Africa’s economic activity, and while household spending is still expected to support growth in 2026, the pace is likely to moderate as external pressures intensify.