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May retail sales in Japan outperformed expectations as COVID limitations were relaxed

Image: Reuters Berita 24 English - May saw a third consecutive month of growth in retail sales in Japan , supporting the idea that robust co...


Image: Reuters

Berita 24 English - May saw a third consecutive month of growth in retail sales in Japan, supporting the idea that robust consumption will drive the country's economic recovery this quarter. However, increasing inflation threatens household spending for the remainder of 2022.

According to government data released on Wednesday, retail sales increased by 3.6 percent in May compared to a year earlier, which was slightly more than the median market prediction of a 3.3 percent increase.

It was the third month of growth since March, when the government eliminated all coronavirus limitations on face-to-face services nationally. It came after an upwardly revised 3.1% gain in April.

Retail sales increased by 0.6 percent month over month in May on a seasonally adjusted basis, following an increase of 1.0 percent in April.

During the "Golden Week" holiday period in early May, Japanese consumers dined out and travelled domestically, taking advantage of the break sans COVID-19 limits for the first time since 2019.

According to the most recent Reuters poll, economists predict that the world's third-largest economy would grow by an annualised 4.1 percent this quarter after contracting by 0.5 percent from January to March due to the recovery in service consumption and broader household expenditure.

Concerns have been raised that Japan's consumption-led recovery could be weakened for the remainder of this year due to rising living expenses brought on by higher commodity prices and the yen's collapse to 24-year lows.

Prior to the national upper house vote next month, consumer inflation has taken centre stage, hurting Prime Minister Fumio Kishida's popularity even though it is still widely believed that his party would win.



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