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Economy in Brief

June Department Store Sales in Japan Suggest Deflation Continues
by Louise Curley July 26, 2004

June department store sales in Japan showed a 5.7% decline from June, 2003 on a same store basis. Total department sales declined 6.08%. Much of the decline is due to the continued influence of falling prices.

No data are available on the volume of department sale or any other monthly sales data. The best way to see the impact of consumer deflation is to compare household spending, ex rent in current and 1995 yen in the National Accounts, as shown in Chart 1. Since early 1999, the volume of household spending, ex rent has risen while such current yen prices have decline.

The department store data suggest that second quarter household spending, ex rent, in the National Accounts will show a decline in nominal terms from the first to the second quarter. Although department store sales, are only a small fraction of total household expenditures, excluding rent, there is a fairly good correlation (.86) between the two series when department store sales are on a quarterly basis and household spending is on a seasonally unadjusted basis, as can be seen in Chart 2. For the second quarter of this year, department store sales were 1853.1 billion Yen, 4.90% below the first quarter and 3.13% below the second quarter of a year ago.

  Jun 04 May 04 Jun  03 M/M % Y/Y %  2003 % 2002  %  2001 %
Department Store Sales (Bil Yen) 610.0 618.9 650.0 -1.36 -6.08 -2.79 -2.66 -2.81
  Q2 04 Q1  01   Q2   03  Q/Q %  Y/Y %      
Department Store Sales  (Bil Yen)  1853.1 1948.6 1921.9 -4.90 -3.13 -2.79 -2.66 -2.81
                 
  Q1 04   Q4 03   Q1 03 Q/Q %  Y/Y % 2003 %   2002 %   2001 %
HH expenditure, ex rent  (Bil Yen) 56391.0 58299.0 55382.2 -3.27 1.82 -1.11 -0.78 0.11
HH expenditure, ex rent  (Bil '95 Yen) 61951.9 63687.1 59666.0 -2.77 3.78 0.64 0.82 2.24
Department Store Sales  (Bil Yen) 1948.6 2324.0 1965.2 -16.15 0.84 -2.79 -2.66 -2.81
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