Japanese retail sales remain sluggish in October as high costs for necessities are eroding the effects of wage hikes and warm weather dampened demand for autumn and winter clothing and other seasonal goods. The year-on-year increase accelerated to 1.6% (consensus was +2.0%) from a revised 0.7% in September but it was still lower than 3.1% in August. Vehicle sales rebounded and fuel sales also rose on higher prices after two months of decline. The lingering heat wave caused the national average sales of 70 department store chains to suffer its first year-on-year decline in nearly three years.

On the month, retail sales were nearly flat, up just 0.1% (below the consensus call of +0.7%), after plunging a revised 2.2% in September for the first drop in six months.

The Ministry of Economy, Trade and Industry maintained its assessment after downgrading it last month, saying retail sales are"taking one step forward and one step back." Previously, it had said sales were"on an uptrend."

Japanese retail sales are forecast to remain sluggish in October as high costs for necessities are eroding the effects of wage hikes and warm weather dampened demand for autumn and winter clothing and other seasonal goods. The year-on-year increase is seen accelerating to 2.0% from a revised 0.7% in September but that would be still lower than 3.1% in August. The declines in new vehicle sales and fuel prices eased in October while department store sales continued slowing.

On the month, retail sales are expected to rise just 0.7% after plunging a revised 2.2% in September for the first drop in six months.

Last month the Ministry of Economy, Trade and Industry downgraded its assessment, saying retail sales are"taking one step forward and one step back." Previously, it had said sales were"on an uptrend."

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.