Japan officials reported generally tempered retail sales for May, again posing challenges to the national government and the Bank of Japan on the proper course for economic policies.
The nation's retail sales in May rose a modest 2.2% on year, and declined a seasonally adjusted 0.2% from April, reported the Ministry of Economy, Trade & Industry (METI) on Friday.
In Japan, drug store sales in May rose 6.4% on year, while supermarket sales rose by 5.4% in the same period. Large-scale specialty retailer sales gained by 4.7% on year in May, while convenience store sales rose by 4.2%.
Home improvement store sales inched up by 0.6% on year in May.
In contrast, Japan's famed department store sales slipped 7.3% in May on year reported METI.
Bank of Japan officials have faced a domestic economy that is growling slowly, but one in which inflation is running above the central bank's 2% annual target on the nation's consumer price index (CPI)-core, a gauge that strips out fresh foods.
In May, Japan's CPI-core logged a 3.7% on-year gain.
In addition, as if to underline the point, the CPI-core for Tokyo region rose 3.1% on year in June, reported the nation's Ministry of Internal Affairs and Communications on Friday.
But the Bank of Japan also anticipates sluggish economic growth; in May, the central bank estimated nation's gross domestic product (GDP) would expand by a tepid 0.5% in the fiscal year started April 1.
Moreover, Bank of Japan officials have reiterated a policy goal of keeping demand for labor strong enough that real wages rise, boosting consumption, and pulling the whole domestic economy upward. Raising rates to cool inflation would also soften labor markets.
The muted May retail sales report will challenge perceptions whether consumption outlays are rising fast enough.
The Bank of Japan next meets on July 30-31. At its last meeting, concluded June 17, the central bank held its key policy rate unchanged at 0.5%.
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