Japan’s retail sales grew in the very first instance in the past three months in October. However, it was lower than anticipated, and the overall trend in private consumption suggested that the country is experiencing a prolonged strain on the fragile recovery of the economy despite the ease of the Covid-19 curbs.
In the wake of a bigger-than-expected decline between July and September, experts expect the third-largest economy in the world to recover this quarter due to an increase in household spending, however the issue of supply remains a major concern for businesses that depend on exports.
“However, as people are still wary of another virus wave, they’re not going out and spending actively,” said Masato Koike, senior economist at Dai-ichi Life Research Institute, adding that stagnant wage growth is an additional headwind to fostering solid consumption growth.
Retail sales jumped 0.9 per cent in October, compared with the previous year the government’s data showed on Monday, which was lower than the median forecast of an increase of 1.1 per cent increase. The increase was a follow-up to an upwardly adjusted 0.5 per cent drop in September.
A 25.9 per cent rise in sales of fuel due to the rising price of petroleum products prices helped boost the overall retail figures as sales of other goods other than fuel decreased 1.2 per cent year-on-year. Car sales fell 19.5 per cent from the year before which was the largest drop in a month since January 2011 and dragged down by supply shortages as per an official of the government.
In comparison to the previous month in October, retail sales increased 1.1 per cent on a seasonally adjusted basis in October after an upwardly adjusted 2.8 per cent gain in September.
Japan has relaxed restrictions on coronavirus on the hours that restaurants can serve food large-scale events, borders as the number of cases has decreased dramatically, and more than three-quarters of the country’s population are completely immunized. Find out more
Statistics from the private sector have shown that the return of spending by consumers was slow in October. Analysts claimed that a complete recovery for sectors that have been hit hard by the pandemic , like face-to face services will take more time. Read more
“Indeed, there are signs that consumers are finally shedding their caution as mobility only started to surpass its 2020 level in November,” said Marcel Thieliant, senior Japan economist at Capital Economics. “Spending on services should finally start to recover in earnest now.”
To help Japan’s slow economy, the government last month announced an unprecedented $490 billion stimulus plan, which includes cash payments to families with children as well as subsidy payments to Covid-hit firms
(Adapted from Reuters.com)