Finally some promising news for the Japanese economy, with retail sales across the world’s third largest economy posting the fastest increase seen since five months during March. Data released by the government reveals that Japan’s retail sales soared by 5.2% YoY in the month of March, coming in higher than economists’ expectations for an increase by 4.7% instead.

On a monthly basis, retail sales were up by 1.2% since February on a seasonally-adjusted basis. The annual rise registered in March was the highest reading seen since October 2020 when they had increased by 6.4%, powered by pent-up demand among consumers.

The spike in March’s figures came on the back of improving weather which spurred consumers’ visits to shopping and commercial outlets. In addition, pent-up demand saw consumers spending more on clothing, accessories as well as general merchandise in addition to shopping for essential items.

While supermarket sales fell by 2.1% in March, sales in department stores increased by 19.3%, indicating higher demand for non-essential products as the state of emergency was eased. However, Japan is currently experiencing the fourth wave of the pandemic, and with just a few weeks to go for the Tokyo Olympics, the government has imposed restrictions once again which are likely to impact domestic consumption through April.