As is becoming customary in the traditional media, bad weather is presented as the principal culprit:
The value of retail sales was 2.2 per cent lower in July than a year before – the largest drop since summer 2005. As so often, the figures were blown around by the weather, which affects consumer habits. A rainy three-day holiday weekend kept shoppers away at a crucial time.
Japan's retail sales fell more than twice as much as economists expected, as a tax increase and a weekend typhoon kept shoppers away from the nation's department stores and car dealerships.
However a closer look at the data - which can be obtained from the charts below - reveals that this is something more than a one off, there is a trend here, and domestic consumption remains weak in Japan. Indeed the drop year on year is so significant because the July 2006 number was also low, and guess what, the weather was the problem back then. I think both investors and those interested in the future of Japan are entitled to better than this.
Basically, with consumption hugging the bottom as we are seeing, and new economics minister Hiroko Ota claiming there will be no fiscal party, and growth ex-Japan evidently slowing in the wake of the recent financial turmoil, I would be revising downwards rather than upwards my recent GDP appreciation.
First off, here's the index itself.
And here are the changes, year on year.