Japanese retail sales rose for a ninth straight month in November, data showed on Tuesday, as the lifting of Covid-19 border controls and the government’s domestic travel subsidy helped consumer demand.

But from the previous month, sales fell from October, with price increases in daily necessities weighing on Japanese households as the nation’s core consumer inflation rate hit a fresh 40-year high, indicating price hikes were broadening.

A recovery in private consumption, which makes up more than half of Japan’s economy, is key to driving growth in the economy, which unexpectedly shrank in the third quarter.

Retail sales grew 2.6 per cent from the year earlier but short of a median forecast of 3.7 per cent. The pace of annual growth in sales, a barometer of private consumption, slowed from 4.4 per cent in October and 4.8 per cent in September.

On a seasonally adjusted basis, retail sales slipped 1.1 per cent in November from the previous month, down for the first time in five months.

Data showed last week that visitor arrivals to Japan jumped to nearly 1 million in November, the first full month after the country scrapped Covid-19 curbs that effectively halted tourism for more than two years.

A government domestic travel subsidy campaign to help the pandemic-hit tourism industry, which started in mid-October, also encouraged people to spend on travel and travel goods.

Japan’s economy unexpectedly shrank in the third quarter, as global recession risk, China’s faltering economy, a weak yen and higher import costs hurt consumption and businesses.

The government last week revised up its growth forecast for the next fiscal year to 1.5 per cent, from a 1.1 per cent expansion in the previous forecast from July.

• Reporting by Yoshifumi Takemoto and Kentaro Sugiyama; Writing by Kaori Kaneko; Editing by Christopher Cushing.