South Africa’s consumers are staying away from the shops in droves, it has emerged, as retail sales plunged by 5% in March at constant prices, prompting calls for a further cut in interest rates.

New figures from Stats SA have revealed that retail sales for March fell by 5.3% year-on-year (at constant 2008 prices), coming on the heels of a 4.4% decline in February.

The news demonstrates the deterioration this year, following a ray of light in December when sales fell just marginally and in January when they actually rose slightly.

Economists said the news heightened calls for a further cut in interest rates. The Reserve Bank has already chopped 350 basis points from its repo rate, taking it from 12% in December 2008, to its current level of 8.5%.

South African financial institutions all agree that further interest rates cuts are looming, though just how much more is open to debate.

In a report on Fin24, Nicky Weimar, senior economist at Nedbank, predicts another 100 basis point cut in the repo rate in May, with two additional cuts of 50 basis points at the June and August meetings.

Meanwhile, ETM economist Russell Lamberti takes a more conservative stance, noting that the Reserve Bank will have expected the weak retail sales and predicting a 50 basis point cut in May, followed by another 50 later in the year.