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Asian shoppers lift Japan department store sales, outlook murky

A woman is reflected in a glass window of a display outside a department store at a shopping district in Tokyo, Japan.

[TOKYO] Sales at Japanese department stores and convenience stores rose in June for a third straight month, industry data showed, offering some relief to policymakers worried about the fragile state of consumer spending.

But the data underscored the patchy nature of the recovery with department stores benefitting from a shopping spree by Asian tourists, who have flocked to Japan to benefit from the weak yen.

While policymakers have been cautiously optimistic on the outlook for consumer spending, some analysts warn that the rising cost of living could dent consumption ahead as the weak yen pushes up import prices. "I don't think consumption is that strong, hurt in part by rising food and grocery costs," said Mari Iwashita, chief market economist at SMBC Friend Securities. "We've had bad weather in July too, so the outlook isn't very good," she said.

Department store sales rose 0.4 per cent in June from a year earlier despite heavy rain and low temperatures that hurt demand for summer clothing, data by the Japan Department Store association showed on Tuesday.

Sales at convenience stores were also up 0.6 per cent in June on brisk demand for lunch boxes and made-to-order coffee, separate data showed.

The increases are welcome news for the Bank of Japan, which is counting on a rebound in consumer spending to make up for weak exports and underpin a fragile economic recovery.

But the data also underscored a disparity between retailers in big cities and those in regional areas, visited less by overseas tourists.

Department store sales at 10 major cities rose 2.1 per cent in June, while those in other areas fell 3.1 per cent, data showed, a sign the benefits of premier Shinzo Abe's stimulus policies have been slow to reach broader sectors of the economy.