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Japan’s Retail Sales Growth Slowed Down After a Third Quarter GDP Drop


October, 29 2018
watermark Economic news

The retail sales in Japan grew in September for the 11th succeeding month, although the pace slowed down from the past month. It indicates the private consumption not strong enough to avoid slower economic growth.

The sudden decline in exports for the month of September based on the trade ministry data reflects moderate economic growth in the July quarter after expansion three months earlier.

Analysts see the third quarter sluggish growth to be transitory because of natural disasters that affected business and consumer activity in the past few months.

The central bank will monitor incoming reports including factory output and jobless reports during the board meeting this week to update the growth forecast. Data for the gross domestic product for the month of September is scheduled to be released on November 14.

Weakened growth puts into question the capacity of the central bank to reach the annual inflation target of 2 percent.

Gross Domestic Product for the third quarter dropped to 0.1 percent after a solid growth, which in turn prompts the central bank to curb down slightly inflation prospects for the current fiscal year but it is less likely to drop in the future.

Gains in September were driven by increasing gasoline price and strong sales of machine tools, food, and beverage purchases and clothing, while automobile sales decline, as well as, online retailers dropped.

The retail sales decreased by 0.2 percent on a seasonally-adjusted basis in September compared to the previous month increase of 0.9.

Meanwhile, the annual core consumer inflation grew to 1.0 percent in September, which was the quickest in seven months boosted predominantly by higher oil prices to prepare in sustaining price growth.

In the third quarter, the economy rose to 3.0 percent in the second quarter, which was the fastest since 2016, due to steadfast household and business spending. The central bank is presumed to keep their plan to keep the interest rates at a minus 0.1 percent in short-term and zero percent in long-term on a two-day rate review until Wednesday. Yet, the global trade war could obscure the outlook for the country that relies on exports.


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