Retail sales rose 2.5 percent in December from a year earlier, the Trade Ministry said in Tokyo today, the biggest advance since August 2010 and exceeding the 2.1 percent median forecast of 17 economists surveyed by Bloomber News. From a month earlier, sales climbed 0.3 percent.

“Consumers are gradually regaining their appetite,” said Yoshimasa Maruyama, chief economist in Tokyo at Itochu Corp. (8001) “But we can’t rule out the possibility that declines in exports and production due to the global economic slowdown will weaken employment and incomes.”

Consumers are picking up some of the slack after export shipments slid the most since May because of a stronger yen and faltering global demand. The Bank of Japan (8301) said this week that the world’s third-biggest economy may grow 2 percent in the year starting April as the nation rebuilds after the March earthquake that left more than 19,000 people dead or missing.

The yen traded at 77.41 against the dollar as of 10:48 a.m. in Tokyo. The Nikkei 225 Stock Average was little changed. Shares in Ryohin Keikaku Co. (7453), owner of the MUJI retail chain, rose 1.4 percent.

Food and clothing were among items that led to higher retail sales last month, today’s report showed. Sales at Fast Retailing Co. (9983)’s Uniqlo brand stores surged 14.2 percent in December from a year earlier, the first increase since July.

Boon for Retailers

A resurgence in household demand, which slumped in the aftermath of March’s quake as weaker confidence and electricity shortages kept people at home, has been a boon for retailers including Aeon Co. (8267) and convenience-store chain Lawson Inc. (2651), which both posted record operating profits in the nine months ended Nov. 30. Sales at convenience stores open at least a year rose 4.1 percent in December from a year earlier, according the Japan Franchise Association.

In a sign that exports are losing their status as a driver of growth in the world’s third-largest economy, a report this week showed Japan posted its first annual trade deficit since 1980. A yen near postwar highs against the dollar and factory disruptions from the March disaster curbed overseas shipments and higher energy demands bolstered imports.

Separate economic releases today showed core consumer prices, which exclude fresh food, slid 0.1 percent in December, the third consecutive decline. Bank of Japan board members last month expressed concern about how the yen’s appreciation and slower global demand would hurt exporters, a record of a December policy meeting released showed.

To contact the reporters on this story: Andy Sharp in Tokyo at asharp5@bloomberg.net; Keiko Ujikane in Tokyo at kujikane@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net

http://www.bloomberg.com/news/2012-01-27/japan-s-retail-sales-jump-2-5-softening-blow-of-export-slump-on-economy.html

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