• Bloomberg


Retail sales unexpectedly fell in December, underscoring challenges to Prime Minister Shinzo Abe’s effort to stoke a recovery in the world’s third-biggest economy.

Sales slid 0.3 percent from November for a third straight monthly decline, the trade ministry said Thursday in Tokyo. That compared with the median estimate for a 0.3 percent gain in a Bloomberg News survey. Sales increased 1.7 percent in 2014.

A recovery in consumer spending that was hurt by last year’s sales-tax increase is needed to help spur the economy. Talks between business and labor leaders this spring will determine the extent of pay gains that have so far been too small to offset rising living costs for consumers.

“It will take another year or so for sales of durable goods to recover from the slump after the sales-tax hike,” said Takeshi Minami, an economist at Norinchukin Research Institute. “Consumption won’t be able to lead economic growth in 2015.”

Japan’s economy fell into recession last year following a 3 percentage point increase in the sales levy in April aimed at containing the world’s heaviest debt burden.

The higher tax combined with consumer price gains driven by the Bank of Japan’s unprecedented monetary stimulus boosted the cost of living for Japanese households. Wages adjusted for inflation fell for a 17th straight month in November, according to the Ministry of Health, Labor and Welfare.

A drop in the value of fuel sales as oil prices tumbled weighed the most on retail sales last month, according to the trade ministry. Sales of machinery and equipment fell, led by weakness in refrigerators, air-conditioners, washing machines and computers, according to the ministry.

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