retail sales growth accelerates, offering signs of
Send a link to a friend
[October 28, 2014]
By Stanley White
TOKYO (Reuters) - Japanese retail sales
growth accelerated for the third straight month in September in an
encouraging sign that consumer spending could be strong enough to absorb
a second sales tax increase scheduled for next year.
The 2.3 percent annual rise blew past a 0.6 percent increase
expected by economists in a Reuters poll and marked the biggest gain
since March. It followed a 1.2 percent rise in August.
Consumer spending has disappointed since the government raised the
sales tax once in April, so evidence that a durable turnaround is
imminent could make it easier for Tokyo to go ahead with a second
hike in the tax to boost revenue for welfare spending.
Rebounding consumer spending is also a welcome sign for the Bank of
Japan, as it tries to guide inflation to 2 percent some time next
fiscal year to eliminate the risk of Japan falling back into
"The recovery in consumer spending is gaining pace because demand is
improving," said Shuji Tonouchi, senior fixed income strategist at
Mitsubishi UFJ Morgan Stanley Securities.
"Things are finally improving. Consumer spending will make a
positive contribution to third-quarter gross domestic product."
Retail sales accelerated due to gains in apparel, food and beverage
sales, data released by the Ministry of Economy, Trade and Industry
showed on Tuesday.
An adviser to Prime Minister Shinzo Abe has been arguing that the
government should delay a second increase in the sales tax to 10
percent from 8 percent scheduled for October 2015 as the economy is
not strong enough.
The government has already raised the nationwide sales tax to 8
percent from 5 percent on April, as part of a two-stage plan to ease
pressure on the national budget.
[to top of second column]
Abe has to decide by year-end whether to proceed with the second tax
hike to curb Japan's mammoth debt burden, which at more than twice
the size of its economy is the worst in the developed world.
A recent run of weak data on factory output and exports prompted the
government to cut its economic assessment for two consecutive
months, raising speculation that it may roll out more stimulus
spending or push back the second tax increase.
People familiar with its deliberations said the BOJ is preparing to
roughly halve its 1 percent economic growth forecast for this fiscal
year at a meeting on Oct. 31 but stand pat on policy and its
prediction that inflation will hit its 2 percent target in the year
from next April.
(Editing by Shri Navaratnam)
[© 2014 Thomson Reuters. All rights
Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.