MNI 5 THINGS: Japan Jan Retail Hit by Weather, Up on Prices

By Max Sato

     TOKYO (MNI) - Key points from preliminary January retail sales released

Wednesday by the Ministry of Economy, Trade and Industry (METI).

     * Retail sales rose 1.6% in January, posting the third straight

year-on-year rise but coming in weaker than the MNI median economist forecast of

+2.0%. The pace of growth decelerated from +3.6% in December as the lingering

cold weather dampened demand for spring clothing and car sales slipped due to

fading effects of new models introduced earlier. The increase was led by high

prices of fuels and vegetables as well as solid demand for heaters, high-end

electric appliances and computers.

     * On the month, retail sales fell 1.8% on a seasonally adjusted basis in

January, the first drop in three months after +0.9% in December.

     * Looking ahead, officials see a similar trend in February.

     "Demand for spring clothing at department stores remained slow in February

due to lingering low temperatures while wealthy consumers continued to spend on

high-end watches and jewelry, leading to year-on-year gains in department store

sales through mid-February," Kazuhiko Manaka, director of METI's Office of the

Current Survey for the Service Industry, told MNI. "High prices of fuels and

vegetables appear to have continued supporting retail sales in February."

     * METI maintained its view that retail sales are "picking up moderately"

after upgrading it last month. Despite the 1.8% m/m drop in January, the

three-month moving average of retail sales rose 0.3% in November-January from

the previous three-month period.

     * Earlier this month, industry data showed department store sales fell 1.2%

in January for the second straight year-on-year drop as freezing temperatures

across Japan discouraged people from going shopping and heavy snowfalls

disrupted traffic and caused casualties in some regions.

--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: max.sato@marketnews.com

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