Japan retail sales plunged nearly 10 per cent in March compared with a year ago.
The sales slump – 9.7 per cent – was worse than expected, but despite the shock, analysts urged caution in the interpretation of the data. In March 2014, sales were artificially high as Japanese brought forward spending to avoid a sales tax increase that took effect on April 1.
Analysts had expected a fall of close to seven per cent. February’s fall was just 1.8 per cent. Retail sales have been subdued since Japan raised the consumption tax to eight per cent last April.
Marcel Thieliant, an economist at Capital Economics, said in a research note that the spending decline suggests private consumption may have fallen for the first time since the sales tax rose.
“It was widely expected that consumption would benefit from the plunge in energy prices. However, households have chosen to save rather than spend the windfall from cheaper oil.”
The decrease was the worst March fall since 1998.