Japan
Japan's retail sales rose at the slowest pace in nine months as higher prices for food and energy prompted consumers to spend less on clothing.
Sales climbed 0.1 percent in April from a year earlier, the Trade Ministry said today in Tokyo. The median estimate of 19 economists surveyed by Bloomberg was for a 0.5 percent increase.
Consumer confidence is at a six-year low as wage growth fails to keep up with the steepest inflation in a decade. A drop in household spending is a risk for the economy at a time when exports, the main driver of growth in the first quarter, are likely to cool.
“The decline in clothing sales shows that consumers are paring non-essential spending to cope with higher prices,'' said Junko Nishioka, a senior economist at ABN Amro Securities in Tokyo. “Consumers aren't going to increase spending when the outlook for their paychecks is so uncertain.''
The yen traded at 104.90 at per dollar at 11:33 a.m. in Tokyo from 104.63 before the report was published.
Retail gasoline prices rose to a record 160.3 yen a liter ($5.84 a gallon) this week, according to the Oil Information Center. Crude oil exceeded $135 per barrel for the first time last week.
“Higher fuel prices have recently inflated'' headline numbers in retail sales, said Takehiro Sato, chief economist at Morgan Stanley in Tokyo. “Consumer spending will remain unspectacular as real income decreases with an abrupt rise in food and oil prices.''
Biggest Drop
Sales at department stores, supermarkets and convenience stores all declined in April $500 payday loan freecreditreport. Sales at the nation's largest retailers slumped 2.2 percent from a year earlier, the biggest drop since July, today's report showed.
“Department store sales fell in almost every category, led by luxury goods and stalled sales of spring clothes,'' the Japan Department Stores Association said last week.
A report tomorrow is expected to provide further evidence that consumer spending is losing momentum. Household spending probably dropped 0.9 percent in April after falling at the fastest pace in 15 months in March, according to 32 economists surveyed by Bloomberg News. The figures will be released tomorrow, along with data on inflation, industrial production and unemployment.
“We expect consumption to turn negative in the second quarter,'' said Akira Maekawa, an economist at UBS AG in Tokyo.
Growth in consumer spending doubled in the first quarter, helping the economy expand at an annual 3.3 percent pace.
Today's report only accounts for spending in shops. It excludes Internet retailing and outlays on services provided by gyms, restaurants and movie theaters.
“Many consumers nowadays have various purchasing venues such as online shopping, making it increasingly difficult to gauge actual consumption,'' Morgan Stanley's Sato said.
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