JAPAN’S RETAIL SALES RISE
BOJ may trim growth and inflation projections
TOKYO: Japan’s retail sales rose for an 11th consecutive month in September from a year earlier but the pace of gains slowed from the prior month, in a sign private consumption may not be strong enough to avoid a broader slowdown in economic growth.
The trade ministry’s figures followed data that showed an unexpected drop in exports in September, raising the spectre of a marked moderation in economic growth in July-september from the previous quarter’s solid expansion.
Analysts expect the thirdquarter slowdown to be temporary, caused by a string of natural disasters that disrupted business and consumer activity in recent months.
But the softer growth will add to wider concerns about the central bank’s ability to hit its elusive annual inflation target of 2 per cent.
The Bank of Japan will examine the data and coming indicators such as factory output and jobless figures at its board meeting this week, when it updates its growth and inflation projections.
The data feeds into calculations for gross domestic product (GDP) for July-september, which is due out on Nov.14. “The third-quarter GDP likely contracted 0.1 per cent as a reaction to the previous quarter’s solid growth,” said Azusa Kato, senior economist at BNP Paribas Securities.
“The BOJ will probably trim growth and inflation projections slightly for the current fiscal year, but it won’t move for the foreseeable future.”
September’s 2.1 per cent annual increase in retail sales beat the Reuters poll median forecast for 1.6 per cent, trade ministry data showed on Monday, but it was slower than the 2.7 per cent expansion in August.
September’s gains were led by rising gasoline prices and brisk sales of machine tools, food and beverage purchases and clothing, while car sales slipped and online retailers suffered a decline.
On a seasonally-adjusted basis, retail sales fell 0.2 per cent in September from the previous month, following August’s 0.9 per cent increase.
Private consumption, which makes up about 60 per cent of economic activity, is key to the central bank’s efforts to accelerate inflation to its 2 per cent target. However, BOJ Governor Haruhiko Kuroda said it will take longer than initially expected to achieve that target.
Japan’s economy grew an annualised 3.0 per cent in the second quarter, the fastest pace since 2016, led by solid household and business spending, but risks from global trade tension cloud the outlook for exportreliant Japan. The BOJ is widely expected to keep a pledge to guide short-term interest rates at minus 0.1 per cent and long-term rates around zero per cent at a two-day rate review ending on Wednesday.
A salesgirl talks to a customer at a flower shop in a shopping mall in Tokyo, Japan.