Retail sales rose in March as households paid more for gasoline and food, leaving them less to spend on clothing and furniture, government statistics showed Monday.
Sales climbed 1.1 percent from a year earlier, the Ministry of Economy, Trade and Industry said. The median estimate of 17 economists surveyed by Bloomberg News was for a 1 percent increase.
Consumer confidence is near a five-year low as food and fuel prices drive inflation to the highest in a decade. The Bank of Japan lowered its assessment of the economy this month because record oil and raw material costs are squeezing firms and consumers.
“The gain in retail sales is a reflection of rising costs of fuel, not strong consumer spending,” said Mamoru Yamazaki, chief Japan economist at RBS Securities Japan Ltd. “Consumption doesn’t have momentum and downward risks are increasing as inflation outpaces wage growth.”
Fuel sales rose 4 percent in March from a year earlier, METI said. Food and beverages climbed 0.6 percent, while clothing sales slid 0.3 percent.
Revenue at department stores fell in March, led by sluggish demand for clothing, the Japan Department Stores Association said this month.
Household sentiment held near a five-year low in March, a report showed this month. Consumer prices rose 1.2 percent, the fastest pace since 1998, as companies passed higher fuel and food costs on to households, the government said Friday. Wages fell at their fastest pace in three years in 2007.
Inflation driven by higher energy prices “isn’t at all a good thing” given that consumer spending has been flat, economic and fiscal policy minister Hiroko Ota said last week. Spending by consumers accounts for more than half of the economy.
Higher energy prices are the main reason why households are more pessimistic, Noritoshi Murata, president of Seven & I Holdings Co., Japan’s largest retailer, said April 10.
The Topix retail trade index has fallen 9.4 percent this year, more than the 7.2 percent decline in the benchmark Topix index. Sales at the nation’s largest retailers climbed 0.2 percent from a year earlier, Monday’s METI report showed.
Retail gasoline prices stayed near a record high of ¥153 a liter in March, surging 19 percent from a year earlier, according to the Oil Information Center. Crude oil climbed to a record $119.93 a barrel Monday.
Consumers received temporary respite in April, when the expiration of a gasoline tax dragged prices 15 percent lower. The tax, which lapsed following a dispute between the ruling coalition and opposition parties, will probably be reinstated in May.
The METI report only accounts for spending in shops. It excludes Internet retailing and outlays on services provided by gyms, restaurants and movie theaters. The value of online shopping business rose 9.5 percent to ¥3.7 trillion in the year ended March 2007, according to the Japan Direct Marketing Association.
From a month earlier, retail sales rose 0.5 percent in March, METI said.