Japanese retail sales rose 3.9% on year in January (vs. consensus +4.0%) after revving up to +3.7% in December from +2.8% in November and +1.3% October. The 35th straight y/y increase is underpinned by a rebound in auto sales compared to a year earlier, when Toyota Motor suspended production and shipments of some models over safety inspection scandals. Overall, high costs for necessities are keeping households wary of spending beyond necessities.

Record snowfall in many parts of Japan also boosted demand for winter clothing, heaters and other seasonal goods. Higher retail gasoline prices in light of reduced government subsidies have pushed up fuel sales while department store sales remain solid, led by strong spending by visitors from overseas as the weak yen continues. Purchases by tourists from some Asian countries were also high, leading into the lunar new year holidays that began on Jan. 29.

On the month, retail sales rose 0.5% after falling a revised 0.8% in December and surging 1.9% in November, coming in softer than the median economist forecast of a 0.9% gain.

The Ministry of Economy, Trade and Industry maintained its assessment, saying retail sales are taking one step forward and one step back.

Japanese retail sales are forecast to have risen 4.0% on year in January after revving up to +3.7% in December from +2.8% in November and +1.3% October. The 35th straight y/y increase is underpinned by a rebound in auto sales compared to a year earlier, when Toyota Motor suspended production and shipments of some models over safety inspection scandals. Record snowfall in many parts of Japan also boosted demand for winter clothing, heaters and other seasonal goods. Higher retail gasoline prices in light of reduced government subsidies have pushed up fuel sales while department store sales remain solid, although high costs for necessities are keeping households wary of spending beyond necessities.

On the month, retail sales are expected to post a 0.9% gain after falling a revised 0.8% in December and surging 1.9% in November.

Last month, the Ministry of Economy, Trade and Industry maintained its assessment, saying retail sales are “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.