Dear MoneyMorning reader

If today’s headline left you with a ‘sitting on the fence’ feeling then we’ll claim success. Because that’s how we feel about the raft of statistics we’re bombarded with on a daily basis. Whether they’re accurate (or comparable to previous periods) depends on the tomfoolery of statisticians – we’ve already talked about changes they made to the composition of the basket of goods used to calculate the CPI number earlier this year – and yesterday, Statistics SA said the February retail sales figure was “impacted by adjustments” too.

Whether the ‘number’ is ‘good’ or ‘bad’ depends entirely on the spin the media places on it. Need a demonstration? Let’s consider the February retails sales figure just released by South Africa’s data manipulation department. Statistics SA says retail sales contracted 4.5% year-on-year in February 2009 – resulting in a retail sales contraction 1% in the first quarter of this year. The pessimist will argue that this number points to depressed consumer demand and an ailing economy. “It’s not a good number at all,” says Brait economist Colen Garrow, adding that the decline is partly due to job losses which result in “people being scared to buy things.” But to get all teary eyed over a 1% quarterly contraction is foolish. We can turn this pessimism on its head by approaching the data from a different angle. How would the optimist interpret the numbers?

For starters, the optimist will look for a ‘softer’ explanation for the retail sales contraction. He’ll ignore the economists trying to draw a link between the economic malaise afflicting the Western world and South Africa’s consumer woes and conclude that they’re barking up the wrong tree. It’s more likely local consumers are shaking off the last effects brought on by the interest rate Tsunami which battered them between June 2006 and June 2008. If we assume a six month lag before monetary policy changes reflect in the real economy, then South Africa Inc has just shaken off the bitter winds raised by 500 basis points of rate hikes over two-years. And we’re still in for a few months of soft (or slightly slower) retail growth until the impact of the 250 basis point cuts since December 2008 take hold.

It feels good to replace the global recession argument with an interest rate explanation doesn’t it? And it gets better. Once Reserve Bank governor Tito Mboweni sinks his teeth into the latest data he’s going to take steps to help consumers further. That means there’s a chance we’ll see another 100 basis points when the Monetary Policy Committee meets at the end of April. Garrow agrees: “I see the Reserve Bank process of frontloading the rate cuts continuing, so another 100 basis points cut is in the bag.”

It’s this conclusion that helped ease the pain for the country’s leading food & drug retailers. The Spar Group was the only broad-based food retailer to shed value yesterday. Pick ‘n Pay spent most of the day in the red; but ended unchanged. And Shoprite Checkers actually gained a few points. The general retail sector received the news with less enthusiasm; but price movements on the day confirm an interesting trend. Companies like Mr Price and NuClicks which cater to the lower end of the market ended the day in the black. Retail stats or not; the bulk of South Africans still have to provide for their basic food and clothing needs. They’re going to shop down; but not stop shopping. And that means moving from Woolworths to the three food retailers just mentioned – and dumping Foschini and Truworths in favour of budget clothing stores like Mr Price.