KONTAN.CO.ID - TOKYO. Japan's retail sales rose for a ninth straight month in July from a year earlier, handily beating economists' forecasts, in a sign private consumption is supporting growth in the world's third largest economy.

The 1.5 percent year-on-year increase in retail sales in July was more than a median market forecast for a 1.2 percent annual increase, trade ministry data showed on Thursday. It followed a 1.7 percent gain in June.

Consumer spending is picking up moderately with wage growth spreading as labour shortages in an ageing population force companies to increase pay to secure workers.

"The fundamentals for a continued improvement in spending remain in place as household incomes are growing strongly and consumer confidence remains high," said Marcel Thieliant, senior Japan economist at Capital Economics.

A rise in private consumption, which makes up about 60 percent of economic activity, could lift consumer prices, which would help the central bank accelerate inflation to its elusive 2 percent target.

The Bank of Japan at its policy meeting last month conceded inflation could fall short of its elusive 2 percent target until early 2021.

July's retail sales were partly supported by rising gasoline prices. Gains were also helped by online retailers and items such as medicines and cosmetics while a heat wave in the month supported sales of food and beverages.

These gains offset declines in sales of clothes and other items.

On a seasonally-adjusted basis, retail sales grew 0.1 percent in July from the previous month, data from the trade ministry showed.

Japan's economy rebounded in April-June led by strong household and business spending but risks from global trade tension cloud the outlook for the export-reliant economy.

Despite solid growth and a tight labour market, inflation struggles to accelerate, posing a challenge to the central bank's aim of achieving 2 percent inflation.

Japan's annual core consumer inflation, which includes oil products but excludes volatile fresh food prices, held steady at 0.8 percent in July, well below the BOJ's 2 percent price goal, data out last week showed. 

Editor: Wahyu T.Rahmawati