Japan’s retail sales fall as pent-up demand cools amid inflation

Bloomberg

Japan’s retail sales unexpectedly fell in November from the previous month for the first drop in five months as pent-up demand started to cool amid rising prices, outweighing a boost from the return of tourists.
Spending slipped 1.1% from October with outlays on clothing falling in a milder-than-usual month, according to the economy and trade ministry. Economists had expected sales to eke out a 0.2% gain. Strengthening inflation has been cited by analysts as a factor that will increasingly weigh on spending in real terms.
Separate figures showed the jobless rate edged down to 2.5% as Japan’s labour market continues to show signs of tightness. The availability of jobs remained unchanged. A reading that suggests employment conditions may not be strengthening at a sufficient pace to put the kind of upward pressure on wages sought by the government and central bank.
“Retail sales had been stronger than expected due to the rebound from the summer virus surge and government travel support,” said Yuichi Kodama, chief economist Meiji Yasuda Research Institute. “However, it’s now becoming apparent that rising prices may be gradually weighing on consumer spending.” Retail receipts were still up 2.6% from a year earlier, but the figures were inflated by the strongest inflation in four decades.