Retail sales rose by 8,1% year-on-year in November at constant prices, Statistics SA said today. The annual increase for October was revised down to 7,0% from 7,7% previously.

"There is no interuption to aggressive demand and consumers are still being supported by the low price and the low borrowing cost environment. This means interest rates could remain flat for a while," said Mandla Maleka, economist at Eskom.

Consumers are on a spending spree, taking advantage of the lowest lending rates in more than two decades, after the Reserve Bank cut the repo rate by 6,5 percentage points to 7% between 2003 and 2005. Prime lending rates are at 10,5%.

Last week, the central bank cited strong consumer demand as one of the risks to an otherwise favourable inflation outlook, when it decided to leave interest rates unchanged.

Domestic consumption has driven faster growth in Africa’s biggest economy over the past couple of years.

In the three months to November, retail sales rose by 6,8% compared to the same period 12 months ago, in real terms.

Sales in the first 11 months of 2005 were up 6,5%, also in real terms, compared to the same period in 2004.