Japan December retail sales come in below expectations as BOJ meets

Shoppers at the Aeon Lake Town shopping mall on the first day of the New Year sales in Koshigaya, Saitama, Japan on Jan. 1, 2017.
Tomohiro Ohsumi | Bloomberg | Getty Images

Japanese retail sales rose less than expected in December, government data showed on Monday, unwelcome news as the Bank of Japan meets to set monetary policy.

Retail sales rose 0.6 percent in December from a year earlier, below the median market forecast for a 1.3 percent increase.

The Bank of Japan is expected to announce a steady monetary policy after its two-day meeting Tuesday and seek to allay speculation of an early tapering of its massive stimulus.

Weak consumer spending has dogged Japan's economy, which has struggled to achieve steady recovery after decades of deflation and stagnation.

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"I didn't expect December retail sales to be strong because end-year private consumption wasn't strong," said Shuji Tonouchi, senior market economist at Mitsubishi UFJ Morgan Stanely Securities.

"Prices have been rising but it's mostly due to the rise in energy prices, and domestic demand hasn't changed...We are looking carefully at whether this would lead to sustained inflation," Tonouchi added.

Japan's economy expanded for a third straight quarter inJuly-September as exports recovered, but domestic activity remainedweak. Recent data has shown Japan's core consumer prices fell atthe slowest annual pace in nearly a year, a tentative sign thatinflation and domestic demand may pick up in the coming months.