Retail sales exceeded economists' forecasts in January, signaling that a recovery in consumer spending will help the economy return to growth this quarter.
Sales rose 1.9 percent from the same month a year ago, after a 2.5 percent increase in December, the Ministry of Economy, Trade and Industry said Tuesday.
The median forecast of 15 economists surveyed by Bloomberg News was for a 0.1 percent decline.
Compared with December, sales gained 4.1 percent.
Car sales jumped 24 percent, the most in 22 years, after the government reintroduced a subsidy for buyers of environmentally friendly cars.
An uptick in household spending and reconstruction work after last year's earthquake and tsunami may aid an expansion in gross domestic product this quarter after a contraction in the final three months of 2011.
"The unusual surge in retail sales in January is mostly due to the special factor of government subsidies for eco-cars," said Takuji Okubo, chief Japan economist at Societe Generale SA in Tokyo. "Excluding that factor, Japanese consumption is resilient."
While the economy shrank an annualized 2.3 percent in the final three months of last year, RBS Securities Japan Ltd. has forecast an expansion of 1.6 percent this quarter.
The consumer confidence index climbed to 40 in January, the highest since February 2011, the Cabinet Office said Feb. 9.
Monthly wages, including overtime and bonuses, rose for the first time in seven months, increasing a revised 0.1 percent in December from a year earlier, according to labor ministry data released Feb. 17.
A recovery in household demand, which slumped in the aftermath of the March 11 disaster as weaker confidence and electricity shortages kept people at home, is helping retailers.
Yamada Denki Co. forecast earnings Feb. 9 that beat analysts' estimates. Seven & I Holdings Co. plans to open 300 outlets over the next three years.