Reuters, TOKYOJapan’s retail sales last month tumbled at their fastest pace in more than four-and-a-half years as a sales tax hike prompted consumers to cut spending, raising a red flag over the strength of domestic demand. However, some analysts have warned the tax hike, previously postponed twice, could leave the economy without a growth driver amid a slump in exports and production, and as other factors drag on the consumer sector. “Incomes haven’t been rising originally, so consumption hasn’t been growing since before the sales tax hike.”The slump was also sharper than the declines reported after the previous two sales tax hikes, in 1997 and 2014, suggesting other factors are dragging on consumption. Seasonally adjusted retail sales dropped 14.4 percent month-on-month last month, the data showed. Others also noted more structural pressures faced by retailers even before the sales tax hike, such as the prolonged decline in real wages.
