-- Japan's retail sales picked up in March, helped by government support and steady consumer demand, even as rising costs and global tensions cast a shadow over the outlook, government data showed Thursday.
Retail sales rose 1.7% from a year earlier to 14.3 trillion yen, rebounding from a 0.1% decline in February and beating expectations for a 0.8% gain, according to the Ministry of Economy, Trade and Industry. On a monthly basis, sales climbed 1.3% after a 2.0% drop, suggesting spending regained some momentum.
Grocery and dining-related spending inched up, helping offset a sharp fall in fuel sales as energy prices remained volatile. Broader activity was also firm, with commercial sales up 3.2% and wholesale trade rising 3.7%, pointing to underlying demand across sectors.
Still, the mood among consumers is turning cautious. A government survey showed confidence slipped again in April, with most households expecting prices to keep rising over the next year.
"Rising crude prices and supply constraints are likely to weigh on production while lifting inflation," Sompo Institute Plus economist Masato Koike said.
The pressure is showing up more clearly on the production side. Industrial output fell 0.5% from the previous month, marking a second straight decline and missing forecasts for a gain. The drop was led by chemical and petroleum-related goods, where supply disruptions and higher input costs tied to Middle East tensions have started to bite. Output of key materials like polyethylene and polypropylene saw particularly sharp declines.
Manufacturers expect another dip in production in April, suggesting the weakness may persist.