TRADE FINANCE - Interest rates start to slow down consumer demand

ED RICHARDSON
ACTION TAKEN by the Reserve Bank’s Monitory Policy Committee to curb consumer spending is starting to take effect, according to the latest figures on retail spending by Stats SA.
While sales in the fourth quarter ending December 2006 remained strong, there were signs of consumer demand slowing down.
At 12.7%, sales growth in December, 2006 was the same as December 2005, but significantly lower than the level of growth in the other months during the year.
“It appears that the cumulative impact of rate increases is starting to be reflected in retail sales as the general belt-tightening of consumers takes effect,” commented Johan Botha, economist at Standard Bank.
“The Reserve Bank has made it quite clear on many occasions that it is concerned about the general health of consumers and that it would like to engineer a soft-landing for domestic consumers. We now have more tentative evidence that consumers are heeding the call.”