South Africa retail sales up at 9.8pc

Stats S.A. said retail sales grew by 6.9 percent in the three months to April, compared with the same period a year ago, also at constant prices.

A Reuters poll showed economists expected retail sales growth to be steady at 5.1 percent.

"It's very difficult to infer from one month's worth of data a break in the trend that we've seen so far this year which has been that retail sales have been much weaker than market expectations.

"On the whole today's data doesn't detract from the argument that South African consumer finances are still strained, the recent credit figures further suggest that consumption demand is not going to be ramping higher any time soon."

"It's way better than expect given the general feeling that things aren't improving and the negative global sentiment. Public holidays in April may have had an impact as people had time to shop.

"We think retail sales will keep on improving in the next few months because interest rates are still very low and inflation as well and incomes are rising.

"We think there's a possibility interest rates may be hiked more than once this year if we keep on seeing this kind of growth and there aren't any nasty surprises."

"It's a high strong number.

I think perhaps we had a bit of a turn-around in April. We had a two-week break which was a mini-festive and retailers are not closed.

"May will be quite a slow month because the entire splurge will be over as people consolidate their finances.

"If you look at this data narrowly it could shock the Reserve Bank but if they see it in context of long holidays, it will not change anything.

It would be brave in this kind of (global economic uncertainties) environment to go and hike rates."

The rand was trading at 6.80 against the dollar at 1135 GMT, from 6.8205 before the data was released at 1100 GMT. The yield on the 2015 bond was at 7.595 percent from 7.585 percent prior.

- The retail sales year-on-year number has crept up in recent months as consumer demand improves and credit demand, though weak, showed households finances are slowly improving.

- The high level of job losses since the recession is expected to constrain robust growth in retail sales.

- South Africa's Reserve Bank said in its Annual Report on Tuesday it expects the recovery to be self-sustaining.

- At its May policy meeting the bank said positive momentum observed in the past few quarters in household consumption growth appeared to have been sustained.

- Retail sales have previously been a key driver for economic growth, but fell sharply in 2009, during the country's first recession in nearly two decades.

Copyright Reuters, 2011