Retail sales dropped for the first time in 14 months in September as tumbling stocks and stagnant wages discouraged households from spending.
Sales fell 0.4 percent from a year earlier, the first decline since July 2007, after rising 0.7 percent in August, the Ministry of Economy, Trade and Industry announced Tuesday.
Spending was weakening even before the stock rout as households cut purchases at the fastest pace in two years in August amid stagnating wages.
"Households don't want to spend given the sharp fall in stocks and sluggish income," said Masamichi Adachi, senior economist at JPMorgan Chase & Co. in Tokyo. "I see no strength in consumer spending to support the economy at this point."
Sales at supermarket and department stores fell in September. The drop in department store sales came as "sentiment among consumers worsened amid clearer signs the global economy is headed in a recession," the Japan Department Store Association said.