Japan retail sales fall most in 17 years
Stimulus likely to be expanded as consumer spending still struggles a year after tax hike
Japanese retail sales in March declined at their fastest annual pace in 17 years as consumer spending struggled to pick up a year after a sales-tax increase, keeping alive speculation the Bank of Japan will expand stimulus again later this year.
Retail sales slid 9.7 per cent in March from the same month last year, the Ministry of Economy, Trade and Industry said yesterday.
Sales had been expected to drop sharply in comparison with March 2014, when they had surged ahead of the salestax hike the following month, but the result was even worse than the median forecast for a 7.3 per cent fall in a Reuters poll of economists.
In a sign of the persistent spending blues, month-onmonth sales in March declined 1.9 per cent on a seasonally adjusted basis.
“It was clearly disappointing,” said Masamichi Adachi, senior economist at JP Morgan in Tokyo.
“The March figure suggests we were too optimistic we’d see a pickup in early spring,” he said, adding that consumers might be feeling a deterioration in purchasing power amid rising prices.
Markets will be focused on the Bo J’s meeting as well as a slew of other data this week — including industrial production, inflation and employment — for clues on the economy’s performance in the final month of the first quarter.
The central bank is expected to hold off on expanding stimulus at Thursday’s policy review, but remains under pressure to do more to get the economy motoring again after last year’s April sales tax hike clobbered consumption.
Signs of continued weakness in private consumption — which accounts for some 60 per cent of gross domestic product — is a headache for the Bo J as the economic recovery remains fragile following a recession last year.
The year-on-year fall in March retail sales was the biggest since March 1998, when they also slid a year after a similar tax increase.
Sales at large-scale retailers — department stores and supermarkets — plunged 12.3 per cent from a year earlier.