The index moved from 87 to 91 index points in the second quarter of this year, repeating last year’s fourth-quarter record.

BER senior economist Linette Ellis said growth in spending was driven by a combination of disposable income and credit. Real disposable income was growing almost in line with increases in spending as more jobs were created and salaries were increased at above inflation levels.

Standard Bank senior economist Elna Moolman said increased confidence indicated a robust economy. However, the monetary policy committee would be monitoring wage increases and inflation expectations when it me t in August, she said.

Russell Lamberti, an economist at Econometrix Treasury Management, said a high level of consumer confidence was positive for the growth of the economy. However, he said spending on credit was still a concern as household levels of indebtedness had again risen.

Ellis said the Reserve Bank would be under pressure to increase rates by another 50 basis points in August. Lamberti said rising inflation was more a function of external factors, such as a strong oil price, a volatile rand and high maize prices, than internal factors.

Ellis attributed the level of confidence among retailers to the continuing “breakneck pace” at which consumer goods were being sold.

“BER’s latest retail survey results suggest that, despite higher interest rates and rising rate pressures, second-quarter sales growth was as strong as that of the first quarter,” he said.

Most of the survey was conducted before the latest 50-basis-point rate increase on June 7. The Reserve Bank has increased rates five times in the past year, by a total of 2,5%.

Lamberti said that while consumers should be tightening purse strings, domestic demand should not be shut off altogether.

The survey, taking into account responses from about 500 regular participants, found that sales of nondurable goods, such as food and beverages, performed well in the second quarter.

Sales of semidurable goods, such as apparel, regained momentum, while growth of durable goods, most susceptible to rate increases, slowed slightly from “the phenomenal pace recorded at the end of 2006 and during the first quarter of 2007”.

Despite increasing fuel and food prices, the bureau expected a moderation in consumer spending to be mostly felt in sales of durable and semidurable goods.