Japan retail sales growth slows

Japan retail sales grew 0.9 per cent in June – ahead of expectations but much slower than May’s three per cent.

Analysts had been tipping a rise of just 0.5 per cent after the relatively strong May growth.

Government data showed rising fuel prices could have unduly affected the figures in the first half of the year – fuel accounts for about eight per cent of total retail sales, and fuel prices have risen by about six per cent since January.

Capital Economics, in a research note, warned not to pay too much attention to retail sales data as a measure of consumer sentiment.

“We would instead pay more attention to core household spending, due on Friday. This measure of consumer expenditure has done a good job lately in explaining moves in the Cabinet Office’s synthetic consumption expenditure, the monthly equivalent of private consumption as measured in the national accounts.”

A Reuters survey of economists projects a 1.7 per cent growth in household spending year on year in June – far lower than the 4.8 per cent of May.

Nevertheless, May’s retail spending increase marks the third month in a row of growth after mixed results for a year.

In March, retail sales fell nine per cent, although that was largely due to an irregular March 2014 when consumers brought forward spending prior to a sales tax increase on April 1.