South Africa's retail sales, the country's main measure of consumer demand, jumped by 10,3% year-on-year in May, after growth of a revised 8,4% in April, official data showed yesterday.

Given the time-lag the figures are not closely watched by domestic markets, but economists scrutinise them because hefty interest rate cuts in 2003 have made consumer demand the main driver of growth in the continent's biggest economy this year.

"It's a good figure but I don't think the central bank will see this as a problem for inflation or interest rates," Absa economist John Loos said.

"The figures are a bit outdated and I think that we will see that consumer demand peaked in the second quarter of 2004."

Markets did not react to the data from Statistics South Africa, which are based on constant prices, although the rand held a firmer tone at 6,22 against the dollar.

South Africa's central bank is expected to keep its key repo rate on hold at its monetary policy meeting next week, after slashing it by 5,5 percentage points last year, driving commercial lending rates to 22-year lows.

Retail sales climbed by 8,4% in the three months to May versus the same period last year, the data showed.

A figure for the previous three months following the April revision was not immediately available. Month-on-month, retail sales rose by 7,7% in May.

The domestic retail sales figures series was first revised in June to incorporate new and bigger samples of companies, but growth rates were little changed.

They were revised for the second time after complaints about the statistics body's use of back-costing methods, fitting data from the old series for retail sales between January 1998 and December 2002 with the new series which began on January 2003. – Reuters.