"A two-step sales tax increase won't give major damage to growth in Japan's economy"
- BOJ Governor Haruhiko Kuroda
The Bank of Japan Governor Haruhiko Kuroda showed little concern that the government's plan to raise the sales tax will derail the nation's economic recovery as Prime Minister Shinzo Abe weigh whether to proceed with this move. Even with the tax hike, the central bank expects real GDP to rise 1.3% in the fiscal year starting in April. Mr. Kuroda reiterated that the BoJ's aggressive easing policy launched in April has been right on track, stimulating favourable changes in the economy. Inflationary expectations are increasing owing to bold easing measures, with the nation's core consumer price index, excluding fresh food, being highly possible to rise 2% year-on-year toward the latter half of the central bank's projection period through fiscal 2015.
Meanwhile Japanese retailers reported a 0.2% decline month-on-month in June, according to the Ministry of Economy, Trade and Industry on Monday. In contrast, analysts had expected retail sales to increase 0.8% after the 1.5% gain in the previous month. On an annual basis, retail sales rose 1.6%, also against forecasts for a 2.1% advance following the gain of 0.8% a month earlier. Sales from large-scale retailers increased an annual 3.5%, shy of forecasts for a 3.6% jump.
© Dukascopy Bank SA