Japanese retail sales rose a higher-than-expected 4.6 percent on year in February after rising a revised 2.1 percent increase in January as the weak yen and lunar new year holidays in Asia boosted inbound spending at department stores while mild weather pushed up demand for spring clothing, mitigating the drag from suspended vehicle production, The consensus forecast was a 2.8 percent rise.

On the month, retail sales rose a seasonally adjusted 1.5 percent, above the median forecast of a 1.1 percent increase, after a downwardly revised 0.2 percent in January and plunging 2.6 percent in December.

The Ministry of Economy, Trade and Industry maintained its assessment, saying retail sales are"taking one step forward and one step back." The three-month moving average rose 0.1 percent on the month in February after three months of decline.

Econoday's Relative Performance Index stands at minus 18, below zero, which indicates the Japanese economy is performing largely as expected. Excluding the impact of inflation, the RPI is at minus 20.

Sales of automobiles fell 8.6 percent on year in February after marking the first drop in 20 months in January at 4.0 percent drop and after rising 5.1 percent in December. Sales of machinery and equipment (largely consumer electronics) rose 5.4 percent in February for the eighth increase in a row after rising 1.5 percent previously.

Sales of food and beverages, a category which has the largest share in retail sales, posted their 17th straight rise, up 5.7 percent after rising 3.5 percent the previous month. Food price markups have peaked but the weak yen could keep import costs high.

General merchandise sales at department stores and supermarkets marked a 24th straight year-over-year gain, up 8.4 percent in February after rising 3.4 percent in January. Sales of apparel and accessories rose 0.7 percent for the first rise in six months after falling 8.3 percent the previous month. Demand for medicine and cosmetics remained solid, up 8.6 percent in February after a 5.5 percent gain in January.

Sales of fuels rose 2.3 percent on the year in February after rising 1.5 percent in January. Retail gasoline prices in Japan have stabilized after hitting a record high in early September and slowing down afterwards. The government has scaled back subsides to refineries.

Japanese retail sales are forecast to have risen 2.8 percent on the year in February after a downwardly revised 2.1 percent gain in January, led by robust department store sales and steady fuel prices that appear to have mitigated the impact of suspended vehicle production and slower shipments. On the month, retail sales are expected to post a second straight increase, up 1.1 percent after a slight 0.2 percent rise (revised down from a 0.8 percent gain). The METI regards retail sales as"taking one step forward and one step back."

Retail Sales measure the total receipts at stores that sell durable and nondurable goods. The data are part of the Preliminary Report on the Current Survey of Commerce.

Another way to look at consumer spending in addition to the household spending survey is through the retail sales report. This report gives the total value of goods and services sold each month at retail outlets. The preferred number is the change from the previous year. The report serves as a direct gauge of consumption and consumer confidence. Consumer spending is one of the most important leading indicators for the Japanese economy. Increasing sales signal consumer confidence and economic growth, but higher consumption also leads to inflationary pressures.