VAT hike likely to affect retail sales in next quarter

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According to Ernest and Young, South Africa’s largest retailers have reported strong retail sales in the last two quarters.

This is despite the concerning 2.2% contraction in GDP figures and a decline in first quarter retail sales.

According Statistics South Africa, retails fell by 1.2% in the first quarter.

But in the six months under review, the pharmaceutical, health and beauty sector has bucked the trend by outperforming other retail segments.

With the furniture and appliances sector coming out of the doldrums following 6 years of subdued growth.

Food retailers, such as Spar, Pick and Pay, Checkers and Shoprite continue to take the lion’s share in annual profits.

The 1% VAT hike, which took effect in April, and the recent steep petrol hike, is likely to affect retail sales in the next quarter.