The South African final sales grew by 2.5% year-on-year in the first quarter 2026.
Final sales measures what the economy consumed in a particular period. On a national accounts basis, this is calculated by subtracting the change in inventories from gross domestic product (GDP).
Statistics South Africa does not report final sales specifically, but it is an easy calculation. Other countries such as the US do report final sales in their media releases.
The economy is similar to your household
The economy is similar to your household, so when looking at GDP data imagine it is your home.
You are expecting to entertain six guests one evening. In order to cater for them you produce (or buy) potatoes. In terms of the System of National Accounts (SNA) that is equivalent to household consumption. You then need vegetables. The SNA equivalent is government consumption. To add flavour and sustenance you add meat. The SNA equivalent is gross fixed capital formation.
On the day, however, one of your guests brings along a friend that you had not catered for. You do not panic, but rather go to your pantry to add ingredients to your stew. The SNA equivalent is change in inventories.
The SNA says you should subtract a depletion of inventories from GDP. In other words, you have catered for five guests not the six that you had prepared for. Final sales implies you catered for seven guests as that is how many were at your table. Whether you provided that from what you produced or got from your pantry is immaterial.
Bottom line
The change in inventories is a significant component of GDP. Whether that impacts in the next quarter depends on how well stocked your pantry is, whether you live close to a supermarket and whether you expect road closures due to flood damage.
The South African Reserve Bank reported that the inventory to GDP ratio fell to a record low of 5.1% in the fourth quarter 2025. The annual average was only 5.5% in 2025 from 5.8% in 2024, 6.1% in 2023 and is substantially below the 14.1% ratio in 2008. Given the inventory depletion in the first quarter 2026, we should expect another record low level when this is reported later this month.
The attack of Israel and the US on Iran on 28 February has closed the Strait of Hormuz to most shipping. This has resulted in an increase in commodities sourced from the Middle East such as oil, gas, fertilsers and helium.
In response to this the manufacturing surveys in both April and May have shown that respondents have boosted inventories.
Whether this is because stocks were depleted to emergency levels in the first quarter or because retailers fear price increases due to higher transport costs does not really matter.
The fact is that South African final sales grew by 2.5% year-on-year in the first quarter 2026 compared with a GDP growth rate of 2.1% year-on-year when measured from the expenditure side.
The bottom line is that second quarter GDP growth is once again likely to exceed expectations.
