The increase in Japanese retail sales was largely driven by an increase in fuel spending. The appearance of the Omicron variant has not yet had an impact, but it is feared that it will overshadow future demand prospects.
On Monday (27/December), Japan's Cabinet office released data on November retail sales which increased from 0.9 percent to 1.9 percent year-over-year (Year-over-Year). This figure exceeded economists' expectations of a 1.7 percent increase.
Japan Retail Sales Rise Despite
The rise in retail sales was largely helped by fuel sales, which jumped 29.2 percent year-on-year. On the other hand, car sales fell 14.1 percent due to supply chain bottlenecks which resulted in a shortage of raw materials for semi-conductors. Meanwhile, sales of electronic goods fell 10.6 percent due to reduced market demand for electronic products towards the end of the year.
The slick data on Japanese retail sales was also influenced by the declining number of COVID-19 cases, which increased consumer enthusiasm to go out and shop. However, analysts see the outlook for recovery remains shrouded in uncertainty following the emergence of the Omicron variant of COVID.
"Omicron's impact has yet to be seen in November's Retail Sales data and so far consumers have not been too concerned about this latest variant of COVID, as can be seen from the still high foot traffic in Japan's trading hub," said Masato Koike, senior economist at Dai-ichi Life. Research Institute.
The Japanese government said it had not considered adjustments in response to the emergence of the Omicron variant. The reason is, so far no cases of dangerous Omicron have been found and cause large numbers of victims.
"If the Omicron case spikes and poses a risk, then it is possible that the Japanese consumption sector will be pressured by Omicron," said Koike. He added that travelers who had traveled overseas during the holiday season could have spread Omicron.
In an effort to boost the economy, the Japanese government announced that it had approved a budget of 940 billion yen for the 2022 fiscal year. This stimulus includes providing cash assistance to families and businesses still struggling to escape the impact of the pandemic.
USD/JPY is moving steadily
The release of Japanese retail sales data this morning did not have a high impact on the movement of the Yen against the US Dollar. The USD/JPY pair today is in the range of 114.40 or strengthened 0.06 percent on a daily basis. In general, the US Dollar is still quite dominant in line with the easing of the risk-off sentiment of market participants.
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