Japan retail sales growth undershoots forecast, points to tame consumption
today Jun 28, 2018
Annual growth in Japanese retail sales slowed in May to its lowest in seven months, adding to worries about weak consumer spending that caused a first-quarter economic contraction.
The 0.6 percent annual increase in retail sales in May was weaker than the median estimate for a 0.9 percent annual gain, following a revised 1.5 percent increase in April.May’s result marked the slowest growth since a 0.2 percent decline last October.
On a seasonally-adjusted basis, retail sales declined 1.7 percent in May, data from the trade ministry showed on Thursday.
Japan’s economy is expected to bounce back in April-June from the first-quarter contraction that ended the longest growth run since the 1980s bubble economy.
Analysts said the slump was caused by one-off factors such as bad weather and saw it as temporary.
While risks to the export-reliant economy abound, not least from a heated China-U.S. trade dispute that has roiled financial markets, weak domestic demand is a worry for policymakers struggling to stoke sustainable inflation.
A rise in private consumption could lift consumer prices, which may help the Bank of Japan accelerate inflation to its elusive 2 percent target, although it is lagging well behind other central banks in unwinding crisis-mode stimulus.
Growth in fuel sales led May’s retail sales, reflecting higher gasoline prices, while spending on items such as clothes and cars declined in May from a year earlier, the trade ministry data showed.
Labour market data due on Friday is expected to show unemployment steady at 2.5 percent in May with the jobs-to-applicants ratio unchanged at 1.59, its highest since January 1974.
Japan’s annual core consumer inflation, which includes oil products but excludes volatile fresh food prices, held steady at 0.7 percent in May, well below the BOJ’s 2 percent price goal, data out last week showed.
The central bank will scrutinise upcoming data at its rate review in July, at which the nine-member board will conduct a quarterly review of its long-term growth and price outlook and analyse factors behind subdued inflation.
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