Household consumption and expenditure had consolidated itself as a key driver of economic activity in South Africa, having risen to comprise about 66% of South Africa’s current gross domestic product, up from 57% in 1990, Stellenbosch University’s Bureau for Economic Research (BER) consulting economist Linette Ellis outlined on Thursday.

But in an address to delegates at a BER conference, in Somerset West, on the consumer-spending outlook, Ellis cautioned that growth in retail sales volumes was likely to continue to slow during 2013, as real disposable income growth in the country dropped in line with the weaker outlook for both the global and domestic economy.

Ellis expected the slowdown in consumer spending to result in sub-par retail volume growth of 3.4% and retail turnover growth of 9.5% in 2012 and 2013. However these numbers were forecast to accelerate to 4.2% for retail volume growth and 10% for retail turnover growth in 2014.

Growth in retail sales volumes peaked at 7.6% year-on-year in quarter four of 2011, but had moderated to 4.7% in August and September 2012, with the turnover growth easing from 12% to 8.8% over the same time period.

Ellis’s analysis cut across all three categories of nondurable goods (such as food, petrol, pharmaceuticals and other consumables), semi-durable goods (such as clothing, footwear and related goods), and durable goods (which includes cars, household furniture, appliances and some electronic goods).

“We’ve seen very strong growth in the volume growth of durable and semi-durable goods sales over the last decade and a lot of this has been driven by low pricing in these categories and even some deflation . . . but for non-durable goods and services, we’ve seen the opposite trend: very low volume growth and high price increases,” she reported.

Over the last ten years, cumulative price increases were 104% for food, 166% for petrol and 224% for electricity.

While the growth in semi-durable-goods sales held up in the second half of 2012, durable and nondurable-goods sales growth had lost momentum and was likely to decelerate further in 2013.

Durable-goods sales growth would be particularly affected in the short term because of higher import prices, owing to the weakened rand, slower credit growth and the fact that these sales were coming from a base of high growth in 2011.

“Rising food prices will really keep a lid on the volumes in the nondurable-goods sector [in 2013], but there is some light at the end of the tunnel as we do expect the world economy to start recovering towards the end of 2013 and in 2014, and then we can also see volume growth and consumer spending starting to accelerate towards the end of 2013, but very gradually.”

Key drivers of consumer spending were consumers' willingness to spend and their ability to spend. “Not surprisingly the deterioration in the global economic outlook and also the domestic political situation have led to a decline in consumer confidence,” she said, which would negatively impact consumers' willingness to spend.

The ability of consumers to spend was also being impacted by rising household debt and slowing credit growth. In addition the impact of industrial action in the country was likely to hinder employment growth, while lower wage increases and higher household tax burdens would negatively affect disposable income growth in 2013.