Retail sales in Japan decreased by 1.9% in May on an annual basis, extending the decline from last month (0.9%), reports Reuters, citing the Ministry of Economy, Trade and Industry. This is the third straight decline YoY.
Ministry of Economy stated that there’s a weakening trend in sales
Weak data highlight the challenge the authorities in Tokyo are facing – to promote consumer spending and revive the economy. Economists surveyed by Bloomberg predicted a decline of 1.6 percent.
“Consumer spending has been stagnant and the trend is likely to continue for a while due to sluggish growth in wages,” said Hidenobu Tokuda, senior economist at Mizuho Research Institute. “A strong yen will push down import prices, which would be positive for consumers. But the yen’s rises would hurt exports, corporate earnings and capital spending,” he added.
The Ministry of Economy also stated that the trend in retail sales is weakening.
Market turmoil after the referendum in the UK is increasing the problems the institutions in Tokyo are facing, as investors are targeting safe-haven assets like the Japanese yen and its rise weighs on exports.
Largest contribution to the decrease in retail sales have fuels, reflecting lower oil prices. Despite the earlier appreciation of the commodity, it remains cheaper compared to the same period last year.