South African retailers are confident.

The decision to leave the repo rate (South Africa's key interest rate) unchanged at 9.0 percent itself should have been enough to unhinge retail confidence. The South African Reserve Bank (SARB), the country's central bank, in its February 15, 2007 statement said it was afraid that consumer demand was growing too rapidly, even though other inflationary pressures were lessening.

Add to the SARB's decision the fact that the government tabled the federal budget, and the fact that local maize prices were rising, a development that the Bureau for Economic Research (BER) at the University of Stellenbosch, termed a "surge," it would be logical to assume that South African retail confidence should have taken a dramatic hit.

But such was not the case.

On March 19, 2007, the BER released the results of its "Retail Survey" under the headline, "Retail confidence shows remarkable resilience." In fact, retail sales did slow slightly during the first quarter 2007. But the BER said, "The moderation was significantly less than expected."

The BER cited Statistics South Africa for the information that retail sales volume increased in 2006 by a "blistering" 9.7 percent. This equals a record for volume increase set in 2004. One...

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