SA received a reality check on Wednesday as business confidence plummeted in the second quarter and the retail sector took a knock on the back of VAT and fuel increases. While the VAT increase hit consumers hard, the Reserve Bank’s more hawkish tone at the recent monetary policy committee meeting in May suggested that the rate cutting cycle may have come to an end as inflation began to edge upwards. Consumers’ purses have also been stretched by the steep increase in the fuel price. Low inflation and debt service costs coupled with a surge in consumer confidence would provide a much-needed boost for the retail sector, said Nedbank economist Johannes Khosa. This would be contained until there was a meaningful reduction in unemployment. Consumer spending accounts for just more than 60% of GDP and the economy is still reeling from a weak first quarter. At the same time, some of the shine around President Cyril Ramaphosa’s election has begun to wear off as business confidence plummets. A...

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