South African real retail sales pulled back in February. On a seasonally adjusted basis, February sales fell by 0.1% from January.
Statistics South Africa data showed that February real retail sales grew by 1.6% year-on-year after a 4.4% year-on-year increase. Real seasonally adjusted retail sales hit a new record in January 2026. This followed a 3.7% gain in 2025 and a 2.5% increase in 2024.
Household consumption is the single largest category of economic activity. This means that 2026 economic growth had a good start to the year.
Analytical adjustments
As December retail sales are far more than January sales, Statistics South Africa adjusts the data. This is called seasonal adjustment. This removes the effects of normal seasonal variation. The effects of other influences are then recognised more clearly. One such effect could be the introduction of the “two pot” retirement scheme.
From 1 September 2024, South African retirement funds are split into a “savings” (one-third) and “retirement” (two-thirds) pot. Many people accessed their savings pot. This boosted retail sales in 2025.
The other adjustment made is to remove the effect of inflation. Retail inflation is not the same as consumer inflation. This is because they measure different baskets.
Economists make a further adjustment. They take the real seasonally adjusted data and then index the data to a starting point. This is normally started at an index value of 100. This means it is easy to get a percentage increase. Consequently, the January 2026 value is 10.4% higher than the January 2024 level.
February 2026 monthly change
The monthly detail shows why South African retail sales pulled back in February.
There was only out of the seven categories that had a monthly increase in February. That was textiles, clothing, footwear and leather goods. The real seasonally adjusted February monthly change was a 1.0% increase.
Food, beverages and tobacco in specialised stores had a 3.6% monthly drop. Illicit sales of alcohol and cigarettes are taking away sales from legitimate retailers.
The illicit economy, or shadow economy, comprises illegal transactions, counterfeit goods, and, as of 2026, roughly 10% of South Africa’s GDP.
Evidently, organised crime syndicates control this sector. It includes smuggling, drug trafficking, and illegal mining.
Consequently, the tobacco sector provides a cautionary tale as to the impact. Once a robust industry supporting tens of thousands of jobs, it has been devastated by illicit trade.
Currently, about three out of every four cigarettes sold in South Africa are illegal. These do not pay tax. The government between R18 billion and R28 billion a year in tobacco taxes. Legitimate manufacturers cannot compete with packs selling at less than R20. This is below the minimum collectible tax of R26.22 per pack. Thousands of farm and factory workers have lost their livelihoods.
Accordingly, the liquor industry reports that illicit alcohol now makes up close to a fifth of consumption, costing the government more than R16 billion annually and exposing consumers to unsafe products.
Hardware, paint and glass retailers also had a bad February. Their sales fell by 2.9%. Building plans had a poor start to the year.
General dealers, who have the largest share of the retail market, had a 1.4% monthly decrease.
