28.10.201401:39:08UTC+00Retails sales for Japan post best climb in four months

Japanese retail sales have increased by the largest margin in four months, suggesting that Asia’s second largest economy is starting to recover from the impact of a sales tax hike earlier in the year just as Prime Minister Shinzo Abe mulls over another increase.

According to a report from the trade ministry, sales in Japan improved by 2.7% in September compared to the 1.9% rise in the previous month of August. For the third quarter as a whole, sales advanced by 1.4% compared to the year before to bounce back from the 1.8% decline in the second quarter.

The positive figures are expected to boost support for a further increase in the sales tax to 10% in October 2015 just as discussions are becoming heated over whether the Japanese economy can bear through it again. Abe is set to make a decision before the end of the year based on Japan’s economic strength.

Economist Marcel Thieliant from Singapore’s Capital Economics says that, “The jump in retail sales in September confirms that private consumption is recovering from the slump caused by the sales tax hike.” He added that, “Wages will have to rise faster for spending to increase further.”

After the previous sales tax hike to 8% in April, Japan went through its largest contraction in over five years. Chief economist Junichi Makino from SMBC Nikko Securities Incc claims that the trade ministry’s data shows that the slump is “generally over.”