UPDATE 1-Japan retail sales fall as consumption loses momentum
* July retail sales -0.8 pct yr/yr vs forecast -0.2 pct yr/yr * Consumption loses momentum as exports struggle to recover * Japan economy may hit a soft-patch later this year -analyst By Tetsushi Kajimoto TOKYO, Aug 30 (Reuters) - Japanese retail sales posted a faster-than-expected decline in the year to July, down for the first time in eight months, as a boost from stimulus-driven consumption tapers off and sluggish exports cloud the outlook for the world's third-biggest economy. The 0.8 percent decrease in retail sales in July was bigger than a median market forecast for a 0.2 percent decline. It followed a meagre 0.2 percent gain in June after robust sales seen earlier this year. The data provided more evidence that private consumption, which accounts for roughly 60 percent of the economy, is losing momentum after having rebounded from the slump caused by last year's earthquake and tsunami. Some economists expect the economy to enter a soft patch later this year as government subsidies for low-emission car purchases are running out and exports are languishing, keeping the Bank of Japan under pressure to ease monetary policy further. "Momentum in private consumption has slowed down as the income situation has not improved. The not-so-good mood in the financial markets is also impacting on sentiment," said Yasuo Yamamoto, a senior economist at Mizuho Research Institute. "Private consumption is moving sideways at the moment and it will likely slow down further from around September as benefits from government subsidies for fuel-efficient car purchasing will wane." Sales of cars rose 32.5 percent in July from a year earlier, further slowing from a record 55.3 percent gain in the year to April, data from the Ministry of Economy, Trade and Industry showed. Sales of food and beverages fell an annual 1.6 percent in July due to sluggish sales of beer and soft drinks due to poor weather. Fuel sales also dropped 7.0 percent in the year to July reflecting the decline in oil prices. Compared to the previous month, retail sales fell 1.5 percent, following a 1.2 percent decline in the previous month, the data also showed. Recent weak data could raise policymakers' concern that fresh stimulus measures could be needed, as exports may struggle to recover before the effect on the economy of rebuilding from the March 2011 disaster begins to fade. Japan's economy has so far outpaced growth of most G7 countries on solid private consumption and reconstruction spending. But export data posted in July showed the sharpest annual drop in six months, in line with trends seen in other export-driven Asian economies, casting doubt on Japan's recovery prospects. The BOJ frets that the timing of a recovery may be delayed, but wants to hold off on easing monetary policy again -- after having acted in February and April -- unless risks heighten enough to kill any chance of a recovery.
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