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Japan's retail sales fall piles pressure on BOJ

An employee places a new price sign on bottles of coffee at an Aeon Co. supermarket in Chiba, Japan.
Tomohiro Ohsumi | Bloomberg | Getty Images
An employee places a new price sign on bottles of coffee at an Aeon Co. supermarket in Chiba, Japan.

Japan's retail sales unexpectedly fell on-year in September, official data showed on Wednesday, suggesting that consumer spending does not the momentum to make up for weak exports and factory output.

The retail sales news could add to pressure on the Bank of Japan under to expand monetary stimulus, possibly as soon as its rate review meeting on Friday, when it is also expected to slash its rosy economic and price projections, analysts say.

Retail sales fell 0.2 percent in September from a year earlier, compared with economists' median estimate for a 0.4 percent rise, the Ministry of Economy, Trade and Industry said on Wednesday.

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The decline, which followed five straight months of gains, was largely due to sluggish demand for cars and fuel, according to the data.

On a seasonally adjusted basis, retail sales rose 0.7 percent in September from the previous month.

Japan's economy shrank in April-June and may suffer another contraction in July-September on weak exports and consumption.

Analysts say any rebound in the current quarter will be modest as companies feel the pinch from soft demand in China and other emerging Asian markets.