Japan retail sales post worst fall in over 4 years due to tax hike, Latest Business News - The New Paper

Japan retail sales post worst fall in over 4 years due to tax hike

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TOKYO: Japan's retail sales tumbled at their fastest pace in more than 41/2 years last month as a sales tax hike prompted consumers to cut spending, raising a red flag over the strength of domestic demand.

The Japanese government increased the nationwide sales tax to 10 per cent from 8 per cent on Oct 1, in a bid to fix the industrial world's heaviest public debt burden, which is more than twice the size of the country's gross domestic product.

But some analysts have warned the tax hike, postponed twice, could leave the economy without a growth driver amid a slump in exports and production and as other factors drag on the consumer sector.

Retail sales fell 7.1 per cent last month from a year earlier, pulled down by weak demand for big ticket items such as cars and household appliances as well as clothing, Japan's Trade Ministry data showed yesterday, with department stores hit hard.

The drop was the biggest since a 9.7 per cent fall in March 2015 and worse than a 4.4 per cent decline predicted by economists in a Reuters poll. - REUTERS