Japanese retail sales grew less-than-expected in September as the government subsidies for fuel-efficient car purchases came to an end, raising concerns that the economy may slide into recession and increasing the pressure faced by the Bank of Japan to loosen policy further.
The disappointing news from the retail front adds to a recent run of weak economic data. The decline in consumer prices for the fifth consecutive month in September coupled with political pressure is likely to prompt the Bank of Japan to ease policy further tomorrow to battle deflation and support the economy.
Retail sales rose 0.4 percent year-on-year, following a revised 1.7 percent gain in August, data from the Ministry of Economy, Trade and Industry showed on Monday. Economists had forecast a 1.2 percent increase.
Sales increased for the second straight month following a 0.7 percent decline in July. Meanwhile, automobile sales were down 1.6 percent from a year ago, marking the first decline in 12 months.
Month-on-month, sales tumbled 3.6 percent in September, which was reportedly the biggest fall since the March 2011 earthquake and tsunami disaster.
Finance Minister Koriki Jojima said today that he expects the central bank to take decisive policy steps to fight deflation.
Official data showed on Friday that the core consumer price index that excludes fresh food fell 0.1 percent year-on-year in September, following a 0.3 percent fall in August. On the same day, the government announced a JPY 750 billion stimulus package for the flagging economy.
The BoJ is widely expected to cut its forecast for GDP and inflation at the conclusion of its 2-day Monetary Policy Board meeting on Tuesday. Speculation is also rife that the bank will consider another round of monetary easing at the meeting.
The bank refrained from augmenting its stimulus at its October 5 meeting after increasing asset purchases by JPY 10 trillion in September. The government has been calling for more BoJ action after it cut the assessment of the economy for a third consecutive time in October.
by RTTNews Staff Writer
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