–METI Keeps View: Retail Sales on Gradual Uptrend
–High Prices for Food, Beverages Supporting Overall Retail Sales
–Department Store Sales Boosted by Influx of Foreign Visitors
By Max Sato
(MaceNews) – Japanese retail sales continued to post a solid gain on the year in October, up 4.2%, amid smooth deliveries of automobiles, but the pace of increase was slower than forecast and decelerated further from September’s revised 6.2% rise, data released Thursday by the Ministry of Economy, Trade and Industry showed.
On the month, retail sales slumped a weaker-than-expected 1.6%, the first drop in four months, as the lingering heat wave dampened demand for autumn goods.
Sales values remained supported by elevated prices for food and beverages while fuel costs eased. The number of visitors from other countries continued to show a sharp increase since Japan’s Covid border control was widely eased in May and the yen remains weak, shoring up department store sales.
The key points from the METI’s Current Survey of Commerce:
* Retail sales rose a preliminary 4.2% on the year in October for the 20th straight year-over-year rise after rising 6.2% in September (first revised up to 6.3% from 5.8% earlier this month and then revised again today) and 7.0% in August (revised from 7.1%), 7.0% in July and 5.6% in June. The increase was below the median economist forecast of a +5.8% rise (forecasts ranged from 4.6% to 7.4% gains). The 7.3% rise in February remains the highest since the 8.3% increase in May 2021.
* On the month, retail sales slumped 1.6% on a seasonally adjusted basis in October, following a 0.4% rise (revised up from a 0.1% drop) and a 0.2% rise, a 2.2% jump in July and a 0.6% dip in June. It was much weaker than the median forecast of a 0.3% decrease (forecasts ranged from a 0.6% drop to a 1.4% rise).
* The ministry maintained its assessment, saying retail sales are “on an uptrend.” The three-month moving average in seasonally adjusted retail sales fell 0.4% in October after rising 0.9% the previous month.
* General merchandise sales at department stores and supermarkets marked the 25th straight year-over-year gain, up 3.5% in October, after rising 5.6% in September. Sales of apparel and accessories fell 7.2%, after falling 5.9% the previous month, which was the first drop in three months.
* Sales of fuels dipped 0.9% on the year in October for the first drop in four months after rising 7.1% in September, 8.6% in August and marking their first rise in five months in July, up 3.2%. 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 was scheduled to end in September but officials have extended the program through yearned as retail gasoline prices hit record highs from late August through early September.
* Demand for medicine and cosmetics remained solid, up 4.9% in October, after a 5.0% gain in September. Sales of machinery and equipment (largely consumer electronics) rose 0.9% in October for the fourth increase in a row after rising 4.8% in September.
Department Store Sales Continue Recovering but at Slower Pace
Industry data released last week showed department store sales marked the 20th straight year-over-year rise in October, up 6.1%, following increases of 9.2% in September, 11.8% in August, 8.6% in July and 7.0% in June. Sales last month were up 19.2% from the pre-pandemic October 2019, when the sales tax hike in that month caused a slump, and were little changed from September 2018, indicating a pickup.
The Japan Department Stores Association said the protracted heat wave continued to dampened demand for autumn and winter clothing and other seasonal goods but also noted that demand for luxurious brand name products remained on an uptrend and spending by visitors from other countries, particularly China, supported overall sales.
The relatively weak yen and widely relaxed Covid border rules continued pushing up spending by foreign visitors, which rose 178.9% on the year to Y38.3 billion, the highest amount since the association began collecting data on this category in October 2014. It was 49.7% above the level seen in October 2019, showing a clear recovery from the impact of the pandemic on inbound demand.