Japanese retail sales growth in the year to May slowed for a second consecutive month in a sign that a bounce in private consumption after last year's devastating earthquake is starting to fade.
The 3.6 percent annual increase in retail sales in May was more than a median market forecast of 3.0 percent annual growth, but it was also slower than a 5.7 percent rise in the year to April as the benefits of subsidies on energy efficient cars also starts to wane.
Japanese Prime Minister Yoshihiko Noda won on Tuesday lower house approval for his signature tax-increase plan, but enough ruling party rebels rejected the plan to threaten a break-up of the party which could trigger an early election.
The plan to double the sales tax to 10 percent over three years is seen as a first step towards curbing Japan's snowballing public debt, which already exceeds two years' worth of its economic output, a record for an industrialised nation.
Japan's first quarter economic growth was revised up to 1.2 percent from the earlier reported 1.0 percent, reflecting upward revisions in capital spending and private consumption, data showed on Thursday.
However, Japan's current account surplus unexpectedly fell 21.2 percent from a year earlier in April, a sign that a slowdown in China is weighing on demand for the nation's exports and casting doubt on the strength of its economic recovery.
Japan's greying population will continue to exert downward pressure on the country's economy but some of the associated problems can be addressed by businesses responding to growing overseas demand and other measures, Bank of Japan Gov. Masaaki Shirakawa said on Wednesday.
"The current difficulties come not from the continued population aging itself, but from the delayed response to it," Shirakawa said in opening remarks at a conference in Tokyo on demographic changes and macroeconomic performance.
Japanese retail sales rose nearly 6 percent in the year to April, though slightly less than forecast, in a sign consumer spending is holding up on government subsidies for energy-efficient cars and rebuilding of the earthquake-battered northeast.
Retail sales rose 5.8 percent in April from a year earlier, less than a median market forecast for a 6.3 percent increase, trade ministry data showed.
Household spending rose 2.6 percent in April from a year earlier in price-adjusted real terms, the Internal Affairs ministry said.
Japan's exports rose less-than-forecast in April hurt by a drop in shipments to China and Western Europe.
Exports rose by 7.9 percent from a year earlier. Most analysts had forecast growth of close to 12 percent.
Shipments to China, Japan's biggest trading partner and Western Europe, one of its key markets, fell by more than 7 percent.
Japan's economy bounced back from a year-end lull in the first quarter, powering ahead of other major industrial nations thanks to rebuilding of the tsunami-battered northeast, solid private spending and some improvement in exports.
The world's third largest economy grew 1.0 percent in the January-March quarter, just ahead of a median market forecast of 0.9 percent, and growth in the final three months of 2011 was revised to flat from a 0.2 percent contraction, government data showed on Thursday.
Japan's hard-hit manufacturers are facing a long summer with businesses making everything from ice cream to crayons fretting production may be hampered as the now nuclear-free nation faces energy cuts. A hot summer would usually be good news for Ezaki Glico, a major snacks and ice cream maker, with soaring temperatures increasing appetites for cooling foods. But looming power shortages could make satisfying them hard.
A month earlier than last year, Japan has launched its annual "Cool Biz" campaign to save electricity during summer.
The initiative allows civil servants to work tie-free and with their sleeves rolled up.
In June, Japan is set to go even further with "Super Cool Biz", allowing flip flops and Hawaiian shirts in the public service.
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Japan's core consumer prices rose 0.2 percent in March from a year earlier due to higher energy costs, but analysts say the country's escape from deflation is years away.
The rise in the core consumer price index, which includes oil products but excludes volatile prices of fresh fruit, vegetables and seafood, beat a median market forecast for a 0.1 percent gain and followed a 0.1 percent rise in February, data by the Internal Affairs ministry showed on Friday.