After Abe government raised sales tax from 5 to 8 per cent, factory output dropped by 3.3 per cent between May and June. Although "pent-up demand ahead of the sales tax hike was bigger than expected," consumers will come back, analyst expects.

Tokyo (AsiaNews/Agencies) - Japan's factory output fell 3.3 per cent from May to June, the latest sign that the recent sales tax rise has affected consumer demand.

Japan's Abe government raised its sales tax from 5 per cent to 8 per cent in April this year; this pushed up prices.

The weak output numbers follow data released on Tuesday, which showed retail sales in June declined more than forecast, down 0.6 per cent from a year ago.

As a result, factory output dropped; its biggest since the 2011 earthquake and tsunami.

However, manufacturers surveyed by Japan's Ministry of Economy, Trade and Industry expect output to rise in the coming months. No details have been released however.

"The pent-up demand ahead of the sales tax hike was bigger than expected so the consequent downturn is pretty steep, which is probably why output fell so much in June," said Junko Nishioka, chief Japan economist at RBS Securities.

Nevertheless, "We don't expect output to keep falling in the current quarter as the tax hike effect is fading," she said.

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