After lower business confidence, retail sales data released on Wednesday has also disappointed.

Sales in the shops grew by just half a per cent in April compared to the same month a year ago, and  compared to March, sales contracted by more than 1%.

FNB says the sharp decline suggest that consumers may have stocked up on purchases before the implementation of the VAT hike in April.

Food and beverage dealers contracted more than 5% year on year but there were higher sales of pharmaceuticals and furniture.

FNB says retailers may delay passing on costs to consumers in order to keep some momentum of sales.

Investors were looking to Wednesday’s retail sales data for signs that the South African economy had gained momentum since President Cyril Ramaphosa’s election as head of state in February. But sales growth of 0.5 percent in April came in below expectations for growth of 4.1 percent.

Still, many analysts are sticking with optimistic predictions for the remainder of the year.

“Although April figures disappointed we still expect household consumption expenditure growth of 2.3 percent in real terms this year,” Investec analysts wrote in a note to clients, attributing the weak April reading partly to an increase in value added tax from April 1.

In fixed income, the yield on the benchmark government bond due in 2026 was down 3 basis points to 8.96 percent, reflecting stronger bond prices.

Stocks ended slightly higher, but retailers performed poorly. The Johannesburg Stock Exchange’s Top-40 index added 0.6 percent to 52,200 points, and the broader All-share index gained 0.4 percent to 58,437 points.

Among the biggest risers, FirstRand gained 1.2 percent and Old Mutual added 1.4 percent, leading a recovery in the financial services sector after a recent selloff driven by worries about the pace of economic growth.

Retailers Truworths and Mr Price were among losers, falling 3 percent and 2 percent, respectively. Additional reporting by Reuters