The country’s retail sales rose for a fifth straight month in July, beating expectations as the consumer sector continues its recovery.
However it is not all good news unfortunately as a coronavirus resurgence has cast doubts over the spending outlook in Japan. A surge in Delta variant cases this month forced the government to widen state of emergency restrictions, which are now threatening to hurt consumer spending and derail a fragile economic recovery.
Retail sales advanced 2.4 per cent in July from the same month a year earlier, government data showed on Monday, slightly faster than economists’ median forecast for a 2.1 per cent rise in a Reuters poll. It followed a 0.1 per cent increase in June.
“The recent strength in retail sales is unlikely to last,” Marcel Thieliant, Senior Japan Economist at Capital Economics, said in a note. “The severe Delta wave now hitting the country coupled with an ever-expanding list of prefectures under states of emergency resulted in a renewed weakening in consumption this quarter,” Thieliant said.
The better-than-expected rise in retail sales in July came as authorities struggled to get a defiant public to heed stay-at-home restrictions in major cities like Tokyo, which hosted the Olympics during the month.
