–METI Keeps View: Retail Sales on Gradual Uptrend
–Demand for Cosmetics, Drugs Remains Solid; Sales of Appliances Stay Sluggish
By Max Sato
(MaceNews) – Japanese retail sales posted their 15th straight year-over-year increase in May, thanks to faster deliveries of automobiles, gradually recovering department store sales and higher prices for food and beverages, mitigating the impact of falling fuel costs and sluggish appliance sales, data released Thursday by the Ministry of Economy, Trade and Industry showed.
Japanese policymakers believe the economy still needs continued monetary and fiscal policy support to achieve sustainable wage growth and stable 2% inflation, pointing that the output gap remains in negative territory, although it has narrowed recently.
The key points from the METI’s Current Survey of Commerce:
* Retail sales rose a preliminary 5.7% on the year in May for the 15th straight year-over-year rise after rising 5.1% (revised up from a 5.0% rise) in April, 6.9% in March and 7.3% in February. The increase was higher than the median economist forecast of a 5.4% rise (forecasts ranged from 4.8% to 6.7% gains). The 7.3% rise in February is the fastest since the 8.3% increase in May 2021.
* On the month, retail sales rebounded by 1.3% on a seasonally adjusted basis in May for the first rise in two months following an expected decrease of 1.1% (revised up from a 1.2% drop) in April and increases of 0.3% in March and 2.1% in February. It was firmer than the median forecast of a 0.9 rise (forecasts ranged from 0.8% to 2.2% gains).
* The ministry maintained its assessment after upgrading it for the second straight month in March, saying retail sales are “on an uptrend.” Previously, it had said retail sales were “on a gradual uptrend.” It noted that the three-month moving average in seasonally adjusted retail sales rose 0.2% in May after rising 0.5% the previous month.
* Sales of food and beverages, which have the largest share in retail sales, posted their eighth straight rise, up 6.6%, after rising at the same pace the previous month as suppliers continued raising sales prices to reflect a spike in import and production costs seen earlier.
* General merchandise sales at department stores and supermarkets marked the 22nd straight year-over-year gain, but the pace of increase decelerated to
3.9% in May from 6.9% in April and 5.4% in March. Sales of apparel and accessories recorded the third straight drop, down 3.7%, after falling 0.6% the previous month.
* Sales of fuels fell 1.8% on the year in May after falling 2.9% in April, 2.7% in March and rising just 0.2% in February. Energy prices have generally eased after a spike last year while the government has been trying to cap retail gasoline price markups by providing subsidies to refineries. The process of phasing out the subsidy program began in June and is scheduled to end in September.
* Demand for medicine and cosmetics remained solid, up 10.8% in May, after a 7.1% gain in April. By contrast, sales of machinery and equipment (largely consumer electronics) marked their third straight year-over-year drop, down 5.6%, following a 7.2% drop.
Department Store Sales Recovering but at Slower Pace
The Japan Department Stores Association noted that sales of clothing, personal goods and cosmetics were solid as traveling for both business and pleasure increased under widely eased Covid public health rules. The Golden Week holidays from late April to early May also attracted many shoppers to retail stores, it said.