Japanese retail sales unexpectedly fell in December for a second month, adding to concern that a tax increase will restrain consumer spending and growth in the world's second-largest economy.
Sales fell 0.5 percent, seasonally adjusted, from November, led by food and sporting goods, the Ministry of Economy, Trade and Industry said today in Tokyo. The decline compared with the median 0.4 percent increase forecast by six economists in a survey.
Consumers may further cut spending at retailers including Aeon Co because they are bracing to pay as much as 145,000 yen (US$1,404) in extra tax in the year starting April 1 under new rules. A drop in consumer spending, which makes up half the economy, might curb growth at a time when exports are flagging.
"The major issue for consumption in 2005 will be the impact of tax changes," said Glenn Maguire, chief economist for Asia at Societe Generale Australia Ltd in Sydney.
"It does have the potential to erode income growth and therefore depress consumption."
From a year earlier, retail sales fell 0.7 percent in December, today's report showed. Sales declined 0.6 percent in all of last year.
Tax breaks "retail sales are largely flat," said Naomichi Miyazawa, a trade ministry official. "Last year our assessment was they are showing signs of recovery."
Japan in April will halve income tax breaks worth as much as 290,000 yen, in place since 1999, to help trim the largest public debt in the world. The Ministry of Finance estimates debt will balloon to 151 percent of GDP by the end of next fiscal year. The lower tax rate is provided through a rebate paid every January.
"If you consider the knock-on effect, such as on employment, the tax increase could as much as halve Japan's potential 1 to 1.5 percent growth rate," Naoki Iizuka, chief economist at Dai-Ichi Life Research Institute, said before the release.
Growth in consumer spending slowed for a second straight quarter in the three months ended Sept. 30, expanding 0.9 percent.
Consumer confidence in December fell for the first time in three months as households grew more pessimistic about employment and wages, which have risen just six times in 48 months.
Exports Retails shares declined. The Topix Retail Trade Index fell 0.5 percent to 691.750 at 2:23pm in Tokyo, led by clothing store Fast Retailing Co and Aeon. The index has gained 47 percent in the past year.
FIREPOWER: On top of the torpedoes, the military would procure Kestrel II anti-tank weapons systems to replace aging license-produced M72 LAW launchers Taiwan is to receive US-made Mark 48 torpedoes and training simulators over the next three years, following delays that hampered the navy’s operational readiness, the Ministry of National Defense’s latest budget proposal showed. The navy next year would acquire four training simulator systems for the torpedoes and take receipt of 14 torpedoes in 2027 and 10 torpedoes in 2028, the ministry said in its budget for the next fiscal year. The torpedoes would almost certainly be utilized in the navy’s two upgraded Chien Lung-class submarines and the indigenously developed Hai Kun, should the attack sub successfully reach operational status. US President Donald Trump
TPP RALLY: The clashes occurred near the Chiang Kai-shek Memorial Hall on Saturday at a rally to mark the anniversary of a raid on former TPP chairman Ko Wen-je People who clashed with police at a Taiwan People’s Party (TPP) rally in Taipei on Saturday would be referred to prosecutors for investigation, said the Ministry of the Interior, which oversees the National Police Agency. Taipei police had collected evidence of obstruction of public officials and coercion by “disorderly” demonstrators, as well as contraventions of the Assembly and Parade Act (集會遊行法), the ministry said in a statement on Sunday. It added that amid the “severe pushing and jostling” by some demonstrators, eight police officers were injured, including one who was sent to hospital after losing consciousness, allegedly due to heat stroke. The Taipei
NO LIVERPOOL TRIP: Taiwan’s Lin Yu-ting, who won a gold medal in the boxing at the Paris Olympics, was embroiled in controversy about her gender at that event Taiwanese boxer Lin Yu-ting (林郁婷) will not attend this year’s World Boxing Championships in Liverpool, England, due to a lack of response regarding her sex tests from the organizer, World Boxing. The national boxing association on Monday said that it had submitted all required tests to World Boxing, but had not received a response as of Monday, the departure day for the championships. It said the decision for Lin to skip the championships was made to protect its athletes, ensuring they would not travel to the UK without a guarantee of participation. Lin, who won a gold medal in the women’s 57kg boxing
The US has revoked Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) authorization to freely ship essential gear to its main Chinese chipmaking base, potentially curtailing its production capabilities at that older-generation facility. American officials recently informed TSMC of their decision to end the Taiwanese chipmaker’s so-called validated end user (VEU) status for its Nanjing site. The action mirrors steps the US took to revoke VEU designations for China facilities owned by Samsung Electronics Co and SK Hynix Inc. The waivers are set to expire in about four months. “TSMC has received notification from the US Government that our VEU authorization for TSMC Nanjing
RSS