Kantaro Koiya and Yoshifumi Yamamoto

TOKYO, Reuters – Japan’s retail sales increased for the first three months in October. However, it was lower than anticipated. This is a signal that private consumption continues to rise despite COVID-19 curbs being eased amid fragile economic recovery.

After a more than expected contraction in July and September, analysts believe the third-largest global economy will recover this quarter due to an increase in household spending. But, there are still supply-side concerns for export-reliant companies.

The government released data on Monday showing that retail sales rose 0.9% to October from last year, which was lower than the average market expectation of a 1.1% rise.

Retail sales increased 1.1% in the month ended March compared to the prior month.

Japan has relaxed restrictions on coronavirus in Japan’s restaurants, at large-scale events, and borders controls. Since infections are now falling dramatically, more than three-quarters of Japan’s population is fully vaccinated.

The return of consumer spending in private sectors was slow in October according to statistics. However analysts believe that full recovery in the hardest hit areas like face-to-face service will take longer.

The government announced earlier in the month a $490 billion record stimulus package to boost Japan’s slow economic recovery. It included cash payments to families with children, and subsidy for COVID-hit companies.