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Retail sales started 2026 on a strong note, helped by lower inflation that boosted consumer spending. But this relief may not last, as prices are expected to rise again later in the year.According to NielsenIQ’s State of the Retail Nation report for the first quarter of 2026, consumers spent more than R173.6bn on fast-moving consumer goods (FMCG). Sales value grew by 6.5% compared with the same period last year, while volumes increased by a stronger 9.1%. This shows that people were buying more goods, not just paying higher prices.The growth was supported by relatively stable food prices and lower fuel costs, which gave households some breathing room after years of financial pressure. However, NielsenIQ says inflation is already starting to rise again and could slow spending in the coming months.“Softer inflation, driven by stable food prices and lower fuel costs, gave consumers and retailers some breathing room early in 2026,” says Zak Haeri, MD for NielsenIQ South Africa. “But that window may be closing. Inflation is expected to rise in the second half of the year due to higher input costs and global factors such as the conflict in the Middle East. Brands and retailers will need to be careful when increasing prices.”Food, the biggest FMCG category, saw steady growth. Volumes rose by 4.5% and sales value increased by 7.2%, reaching R28.1bn for the quarter. Snacking was one of the fastest-growing segments, with volumes up 16.2% and value rising 11.9% to R925m.Most other categories, including beverages, tobacco and personal care, also recorded steady growth. However, baby food and care was the only segment to decline, with sales value falling by 2.1% to about R3.4bn. This suggests that some households are still under financial strain.Traditional trade channels — such as spaza shops and independent retailers — performed well during the quarter. These outlets generated R43.1bn in sales and grew faster than modern retailers in some categories. Their strength comes from being close to where people live and allowing shoppers to make smaller, more frequent purchases.Modern retail, which includes chain stores, franchises and online retailers, still made up the largest share of sales. Sales value grew by 4% to R127.8bn, though volume growth was slower, showing increased competition. Forecourt retailers recorded a 1.3% rise in volumes and a 4.2% increase in sales value to R5.8bn.“Lower inflation gave a small boost to traditional trade, especially among price-sensitive consumers,” says Haeri. “But demand is still limited by weak income growth and high unemployment. Traditional stores have an advantage because they are convenient and allow flexible shopping patterns.”Private label products lost some ground during the quarter, while branded goods gained through promotions. This suggests that some consumers were willing to spend a bit more when prices were stable.Outside FMCG, the technology and durables market remained weak. Though sales volumes increased in some areas, lower prices reduced overall sales value. Smartphone sales were especially weak, as many consumers delayed upgrades or chose cheaper devices.Looking ahead, the outlook is uncertain. Inflation has already started rising again, mainly due to higher fuel costs, and is expected to increase further.“These pressures will affect household budgets for the rest of the year,” says Haeri. “Retailers and brands will need to focus on promotions, product sizes and loyalty programmes. They must balance protecting profits with offering value to customers, or risk losing market share as consumers become more selective.”
