Sales at department stores, electronics shops and auto dealers sank in the first month after the April 1 consumption tax hike after spiking ahead of the deadline.
Four major department store chains including Takashimaya Co. on Thursday reported plunges of between 7.9 to 15.3 percent in April from the previous year on a same-store basis as sales of jewelry and other luxury items tanked.
Among the major electronics chains, Bic Camera Inc. reported a drop of 10 percent and K's Holdings Corp. a drop of 20 percent from year-earlier levels.
New vehicle sales meanwhile fell 5.5 percent to 345,226, the first decline in eight months, according to the Japan Automobile Dealers Association and the Japan Light Motor Vehicle and Motorcycle Association.
In contrast, the tax hike had little effect on food sales, Aeon Retail Co. said, with the Japan Chain Stores Association saying the drop in April was smaller than the one that followed the sales tax hike in 1997.
Visitors to Tokyo Disneyland and Disney Sea even increased from a year earlier, while sales rose from year-earlier levels at such restaurant chains as Royal Host and Mos Burger.
As prices of many goods were forced up by the tax increase, the core consumer price index for central Tokyo in April posted a rise of 2.7 percent from the same month last year, the government said. The April index for all of Japan, due out later this month, is expected to show a rise of around 3 percent. The core index excludes prices for fresh food but not energy.
"As consumption of goods other than expensive products remains firm, the economy is unlikely to deteriorate rapidly," said Hideo Kumano, chief economist at the Dai-ichi Life Research Institute. "Given the risk of wage hikes failing to catch up with price increases, however, we must be alert."