Japanese retail sales tumble

CONSUMERS in Japan kept their wallets firmly zipped in December, sending retail sales tumbling 3.1% from the previous month, and leaving total sales for the year down by 2.2%.

This was the fifth consecutive year of falling retail demand as rising unemployment and the country's economic woes deterred people from spending.

The biggest fall in outlay was at Japan's big stores, where sales crashed by 7.4% over the month, raising fears of further financial difficulties.

Already former top-ranked store chains are sliding into bankruptcy as a decline in spending that has lasted for half a decade hollows out their customer base. The closed signs went up last year on Sogo after 170 years as Japan's top retail name, while the fourth ranked group, Mycal, has also filed for bankruptcy. Daiei, the country's largest supermarkets chain, has sought protection from creditors as it tried to avoid sinking under the weight of bad debts.

Consumers' reluctance to spend is accelerating Japan's economic recession as the closure of major stores also puts big wholesalers and suppliers out of business, raising unemployment and worsening sentiment still further.

Today's figures will also be bad news for the country's banks, which are heavily exposed to retailers and are bracing themselves for further bad debts. Earlier this month Daiei asked its bankers to forgive loans of more than 420bn yen (£2.2bn) in an attempt to stay afloat.