March 22, 2018 / 12:08 PM / a year ago

UPDATE 1-S.Africa's retail sales rise slower in January as Black Friday effect wanes

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JOHANNESBURG, March 22 (Reuters) - South Africa’s retail sales rose slower than expected in January, data showed on Thursday, after a sharp rise in the final months of 2017 as the effect of Black Friday wore off.

Retail sales rose by 3.1 percent year-on-year in January, after increasing by a revised 5.1 percent in December and 7.9 percent the month before that, the statistics office said.

Sales by general dealers and retailers took the biggest knock, while those in cosmetics also fell, the data showed.

Analysts said that an increase in Value Added Tax (VAT) due to start in April would slow down sales further.

Under new President Cyril Ramaphosa the Treasury took the politically risky step of raising VAT for the first time in 25 years in bid increase revenues and slash the budget deficit.

Kevin Lings, chief economist at Stanlib, said: “We might however see some buoyancy in March as people try to get ahead of the VAT increase and then the April number may suffer as a consequence.”

On the depressed sales in January, Lings said it was a result of a slump in sales after the Black Friday sales.

“It’s the Black Friday effect. This is the second year we’ve had strong sales in November and December, and then the consumer almost takes a breather into the second half of December and further than that,” he said.

Further gains in consumer confidence after Ramaphosa became president and an anticipated cut in lending rates next week could cushion the impact on sales after the VAT increase. ($1 = 11.8026 rand) (Reporting by Mfuneko Toyana Editing by James Macharia)

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