–METI Keeps View: Retail Sales Taking One Step Forward, One Step Back
By Max Sato
(MaceNews) – Japanese retail sales rose a stronger-than-expected 2.4% on year in April (consensus was 1.5%), with the pace of increase rising from a 1.1% gain in March, led by strong demand for consumer electronics including air conditioners amid unusually high temperatures as well as higher food and fuel costs, data released Friday by the Ministry of Economy, Trade and Industry showed.
Resumed vehicle production in March after two months of suspension over a safety scandal led to a smaller decline in auto sales but consumers remain generally frugal amid high costs of living.
Strong inbound spending and high demand for luxury brand goods continued to boost department store sales. Retail sales have been above year-earlier levels for a 26th consecutive month, but the recent pace of increase has been slower, staying below the recent peak of a 7.3% rise in February 2023, which is the highest since the 8.3% increase in May 2021.
On the month, retail sales rose a seasonally adjusted 1.2%, recovering from a 1.2% dip in March, which was the first fall in three months. It was stronger than the median forecast of a 0.7% increase.
The METI maintained its assessment, saying retail sales are “taking one step forward and one step back.” The three-month moving average in seasonally adjusted retail sales rose 0.5% on the month in April for the third straight gain after rising 0.2% in March.
Details from the METI’s Current Survey of Commerce:
* Sales of automobiles fell 7.9% on year in April after slumping 15.4% in March and marking the first drop in 20 months in January with a 4.0% fall. Sales of machinery and equipment (largely consumer electronics) rose 9.2% for the 10th increase in a row after rising 8.8% previously.
* Sales of food and beverages, a category which has the largest share in retail sales, posted their 19th straight rise, up 1.7%, after rising 4.5% the previous month. Food price markups have peaked but the weak yen is likely to lead to more price hikes this year.
* General merchandise sales at department stores and supermarkets marked the 26th straight year-over-year gain, up 2.1%, after rising 6.2%. Sales of apparel and accessories fell 1.0% for the fifth straight drop after falling 3.5% in the previous month.
* Sales of fuels rose 4.8% for the sixth straight year-on-year increase after rising 7.4%. Retail gasoline prices in Japan have stabilized after hitting a record high in early September last year and slowing down afterwards.
* Demand for medicine and cosmetics remained solid, up 6.0%, after a 3.6% gain in the prior month.
Department Store Sales Remain Solid Led by Inbound Demand
Industry data released this week showed department store sales marked the 26th straight year-over-year rise in April, up 8.9% at ¥444.1 billion, following increases of 9.9% in March, 14.0% in February and 7.1% in January. Sales last month were also up 2.0% from the pre-pandemic April 2019.
The Japan Department Stores Association said strong inbound spending and high demand for luxury brand goods continued to boost overall sales. Higher temperatures in the second half of the month supported sales of early summer clothing and other seasonal goods, it said. Demand for takeout food during the cherry-blossom viewing season was solid but overall sales of foodstuffs fell on the year due to high prices.
Spending by foreign visitors surged 184.3% on the year to a fresh record high of ¥59.9 billion, beating the previous record of ¥49.5 billion hit in March 2024. It was 74.4% above the level seen in April 2019, surpassing the pre-pandemic levels for the 10th straight month.