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Japan's retail sales slump as tax hike hits

Credit: Reuters Studio
Published on November 28, 2019 - Duration: 01:01s

Japan's retail sales slump as tax hike hits

Japan's retail sales tumbled at their fastest pace in more than 4-1/2 years in October as a sales tax hike prompted consumers to cut spending.

David Pollard reports.

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Japan's retail sales slump as tax hike hits

Raising sales tax - just when the economy's in downturn.

Critics of the Japanese government said it was risky ..

When the hike was made last month.

And they might be right.

Retail sales plunged 14.4 per cent in October, month on month.

Year on year, they're down just over 7 per cent.

The tax itself saw a small nudge from 8 to 10 per cent.

The big concern is the wider hit to output.

Amid a U.S./China trade war, Japan's factory production and exports have slumped.

And a bounce back looks unlikely anytime soon.

Japanese prime minister Shinzo Abe promised to take - quote - 'all possible steps' to offset any impact from the hike.

The pressure is mounting on his government for a major fiscal boost.

In the meantime, wages have seen a first, small, increase since last year - consumers have fractionally more to spend.

But with prices likely to slip unless demand picks up, the danger is they may just decide to wait instead.

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