Japan Retail Sales Fall for 1st Time Since 2022

Retail sales in Japan unexpectedly fell by 1.1% year-on-year in August 2025, reversing an upwardly revised 0.4% gain in the previous month and missing market expectations for a 1% increase. This marked the first annual decline since February 2022 and the steepest since August 2021, as sluggish wage growth continued to erode consumer purchasing power. Sales fell in automobiles (-7.9%), non-store retailers (-7.3%), fuel (-7.2%), department stores (-4.0%), and food and beverages (-0.2%). In contrast, sales rose in other retail categories (6.0%), machinery and equipment (5.4%), pharmaceuticals and cosmetics (2.5%), and textiles, clothing, and personal goods (0.8%). On a monthly basis, retail sales also dropped by 1.1% in August, following a 1.6% fall in July, which was the sharpest monthly decline since August 2021.