Japan’s retail sales fell last month the most since 1998, cutting against Bank of Japan (BOJ) Governor Haruhiko Kuroda’s view that cheaper energy would give a boost to the world’s third-biggest economy.
Sales dropped 9.7 percent from a year earlier, when there was a run-up in purchases ahead of an April last year sales-tax increase, according to trade ministry data released yesterday. Sales sank 1.9 percent from the previous month, compared with a gain of 0.6 percent forecast by economists in a Bloomberg survey.
The weak reading on consumer spending comes ahead of this week’s BOJ policy decision and economic outlook that could highlight waning momentum in inflation. Kuroda has said cheaper oil might 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,” Citigroup Inc economist Kiichi Murashima said. “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.”
Capital Economics Ltd’s Marcel Thieliant and Mitsubishi UFJ Morgan Stanley Securities Co’s Yuji Shimanaka were the only two economists among 34 respondents in a Bloomberg survey that forecast the BOJ will expand unprecedented monetary easing at tomorrow’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.
The yen was little changed at ¥119.08 per US dollar, bringing its drop to 8.6 percent since Kuroda led a divided policy board on Oct. 31 last year to increase the pace of the BOJ’s asset purchases.
The TOPIX rose 0.7 percent.
Kuroda has repeatedly said the central bank would continue to apply stimulus until consumer price gains are stable at about its 2 percent target.
The BOJ’s main gauge showed inflation slowing to zero in February, weighed down by oil price declines of more than 40 percent in the past year.
The BOJ in January lowered its outlook for core inflation to 1 percent from 1.7 percent for this fiscal year through March next year.
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