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July’s retail sales growth came in as expected on Wednesday, providing hope that economic activity is picking up despite a spate of recent disappointing data.

Statistics SA reported on Wednesday that retail sales in July were 1.3% higher than in the same month in 2017, matching consensus forecasts.

The highest annual growth rates were recorded in retailers of furniture, appliances and equipment, who saw sales growth of 6.9%, followed by clothing and footwear, which grew 3%.

Sales of hardware, paint and glass declined 5.1%, while sales in specialised stores of food, beverages and tobacco fell 2.1%.

Retail sales continue to be under pressure, with many analysts pointing to rising fuel costs and VAT increases that took effect in April.

SA entered into a technical recession in the third quarter, with GDP contracting a surprise 0.7% during the period, surprising analysts.

Higher fuel prices will have to be passed through at some point, both directly and indirectly, if the upwards fuel price pressure persists in SA, Investec chief economist Annabel Bishop said on Tuesday.

"Petrol prices have risen R2.32 a litre since March, but not all the upwards price pressure from rand weakness and/or higher oil prices has been passed directly through to the consumer," she said. Retailers had held back to protect market share in a very low retail inflation environment of 2.2% year on year, versus consumer price index inflation of 4.6% year on year in June.

Losses by the JSE’s listed retailers have been mixed in 2018, with food and drug retailers faring better than those in the clothing and consumer goods sector. By 1pm on Wednesday, general retailers had lost 18% so far in 2018, and food and drug retailers 3.17%. In the same time, the all share index had fallen 5.74%.

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