Retail sales in Japan continued to grow for the third consecutive month in May, driven by wage increases that outpaced inflation and government aid to reduce the cost of living.
According to the Japanese Ministry of Economy, retail sales rose 1.9% from the previous month, exceeding analysts' expectations. Compared with the same period last year, sales rose 5.3%, indicating that consumer spending remains strong.
The increase was driven by sales of vehicles, medicines, cosmetics products and sales at department stores, which also benefited from the presence of foreign tourists.
In addition, demand for seasonal appliances such as air conditioners almost doubled compared to last year as consumers bought earlier before the government enforced stricter energy efficiency standards.
However, consumer spending patterns are starting to change. Sales at drugstores rose more than 7%, while sales growth at convenience stores was slower.
This situation shows that many consumers are increasingly choosing goods at cheaper prices to reduce the burden of the cost of living.
Economists said household spending was still supported by wage growth and government subsidies.
However, they warned that this could be difficult to sustain if inflationary pressures continue to rise and the Bank of Japan gradually raises interest rates.
At the same time, prices of more than 1,000 food and beverage products rose this month, much more than in the previous month. Although the United States and Iran have signed an interim peace deal, tensions in the Middle East have not yet fully subsided.
The situation continues to put pressure on oil prices and raw material costs, thus increasing business operating costs that are ultimately passed on to consumers through higher commodity prices.
