Japan's retail sales soar 5% from 2014, but rises less than expected from March

Japan's retail sales rose less than expected in April compared with the previous year, suggesting a weak start to the second quarter for an economy that is struggling with a devastating effect of last year's sales-tax hike. Sales increased 0.4% from March, when they declined 1.8%, whereas economists had expected a 1.1% gain. Measured on an annualized basis, retail sales soared 5.0% in the reported month, albeit the on-year jump was largely due to weak figure in April 2014. Nonetheless, it was the first increase in four months and came after the 9.7% decline in March. The 2014 sales-tax hike pushed Japan's economy into recession after household and business spending plummeted. Economists are closely watching retail sales for hints that consumers started spending more again. The world's third biggest economy managed to rebound from the slowdown, and grew at the fastest pace in a year in the first quarter. Yet, economic growth is seen slowing to an annualized 2.1% in the second quarter from expansion of 2.4% in the March quarter. The strength in the beginning if the year was supported partly by inventory build-up, which may constrain production in coming months. A second sales tax hike looming in 2017 also casts doubt on whether the recovery can be sustained long enough to push inflation toward the 2% target. The BoJ revised up its assessment of the economy last week amid signs of a pick-up in private consumption, signalling that it has no plan to step up additional stimulus any time soon.