Japan’s retail sales fell in March the most since 1998, cutting against central bank chief Haruhiko Kuroda’s view that cheaper energy will give a boost to the world’s third- biggest economy.
Sales dropped 9.7 per cent from a year earlier, when there was a run-up in purchases ahead of an April sales-tax increase, according to trade ministry data released Tuesday. Sales sank 1.9 per cent from the previous month, compared with a gain of 0.6 per cent forecast by economists in a Bloomberg survey.
The weak reading on consumer spending comes ahead of this week’s Bank of Japan policy decision and economic outlook that could highlight waning momentum in inflation. Kuroda has said cheaper oil may crimp price gains in the near term, while eventually fueling growth and inflationary pressures.
“It’s becoming clear that Japan’s recovery is very sluggish,” said Kiichi Murashima, an economist at Citigroup. “With a tight labor market and better consumer sentiment, we don’t have to change the view that spending will pick up gradually. But uncertainties are growing about the strength of the economy and that’s worrisome for the BOJ.”
Marcel Thieliant at Capital Economics and Yuji Shimanaka at Mitsubishi UFJ Morgan Stanley Securities Co. were the only two economists among 34 respondents in a Bloomberg survey that forecast the BOJ will expand unprecedented monetary easing at Thursday’s meeting. Murashima sees the BOJ adding to easing in July, while a majority of economists surveyed forecast a boost by the end of October.
Bloomberg News, edited by ESM
