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Retail sales fell for a third consecutive month in May as higher interest rates and record petrol prices curbed consumer spending.

July 17, 2008

Retail sales fell for a third consecutive month in May as higher interest rates and record petrol prices curbed consumer spending.

Sales dropped an annual 3.6 percent after declining a revised 1 percent in April, Statistics SA said yesterday.

Retail sales were expected to fall 1.3 percent, according to the median estimate of seven economists surveyed by Bloomberg.

The Reserve Bank has increased its benchmark interest rate six times since June 2006, crimping spending and undermining profit at firms such as JD Group.

JD Group said in May that profit in the six months to February fell 47 percent as higher rates cut spending on furniture and electrical appliances.

“Consumer spending has been eroded,” said Nicky Weimar, an economist at Nedbank Group. “There are signs of the economy losing momentum dramatically.”

Consumer confidence had its biggest drop in 24 years in the second quarter, First National Bank said on July 2.

Other indices also signal further declines in retail sales.

The slowdown in consumer spending may undermine economic growth.