Consumer prices unexpectedly fell and retail sales missed analysts' forecasts, adding to evidence that the economy's expansion is faltering as gains in the yen and austerity measures in Europe affect exports, the government said Friday.
Consumer prices excluding fresh food fell 0.2 percent in June from a year earlier, after the median estimate in a Bloomberg News survey predicted no change.
Retail sales rose 0.2 percent, separate data showed. However, this was the smallest gain since November and less than a median forecast of a 1.1 percent increase.
They also logged a seasonally adjusted 1.2 percent fall from May. Analysts had estimated a 0.2 percent increase.
Sales of machinery and equipment, including televisions and DVD players, were the biggest drag on the retail sector last month, declining 32 percent year on year, the data showed.
"The data clearly signal the economy is losing momentum," said Masamichi Adachi, a senior economist at JPMorgan Securities in Tokyo and a former BOJ official.
"If personal expenditures weaken, that will be bad news for Japan as exports are obviously slowing because of a deepening global slowdown."
The government is relying on domestic demand to support growth as global demand weakens and once disaster reconstruction work in the Tohoku region starts to fade.
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