Japanese retail sales rose a stronger-than-expected 2.4 percent on year in April (consensus was 1.5 percent), with the pace of increase rising from a 1.1 percent gain in March, led by strong demand for consumer electronics including air conditioners amid unusually high temperatures in the month as well as higher food and fuel costs. Resumed vehicle production in March after two months of suspension over a safety scandal led to a smaller decline in auto sales but consumers remain generally frugal amid high costs of living.

Strong inbound spending and high demand for luxury brand goods continued to boost department store sales. Retail sales have been above year-earlier levels for a 26th consecutive month, but the recent pace of increase has been slower, staying below the recent peak of a 7.3 percent rise in February 2023, which is the highest since the 8.3 percent increase in May 2021.

On the month, retail sales rose a seasonally adjusted 1.2 percent, recovering from a 1.2 percent dip in March, which was the first fall in three months. It was stronger than the median forecast of a 0.7 percent increase.

The METI maintained its assessment, saying retail sales are"taking one step forward and one step back." The three-month moving average in seasonally adjusted retail sales rose 0.5 percent on the month in April for the third straight gain after rising 0.2 percent in March.

Econoday's Relative Performance Index stands at plus 3, just above zero, which indicates the Japanese economy is performing largely as expected. Excluding the impact of inflation, the RPI is minus 1.

Japanese retail sales are forecast to have risen 1.5 percent on the year in April after a weaker-than-expected 1.1 percent rise in March and a 4.7 percent jump on leap-year effects in February. Resumed vehicle production and shipments in March after about two months of suspension at Toyota group firms led to a smaller decline in auto sales in April but consumers remain frugal amid easing but still high prices of food and other essentials. On the month, retail sales are expected to partially rebound by 0.7 percent after a 1.2 percent dip. 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.