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South Korea retail sales decline in May steeper than expectations

Retail sales in South Korea declined for the month of May, remaining less than what the market had initially expected, backing the policymakers' concerns over consumption softening in Asia's fourth-largest economy.

Sales at department store chains run by Hyundai Department Store, Lotte Shopping and Shinsegae Co fell 2.7 percent from a year ago, snapping two months of gains and strongly undershot April's 4.3 percent rise in annual terms data released by the Ministry of Trade showed Wednesday. Preliminary data had shown a 1.5 percent rise.

Children's clothes and sports goods had led the fall in department store sales, dropping 7.8 percent in May from a year earlier on changing trends, the trade ministry said. It added that fewer public holidays in May this year compared to 2015 had also taken a bite out of profits. During the same period, discount store sales in May declined 6.3 percent, the same trade ministry data showed.

Sports-related products also fell by 16.4 percent y/y. The ministry blamed fewer holidays and worsened air quality from last year that has led to fewer South Koreans spending time outdoors. May discount store sales were worse than a 5.5 percent fall initially estimated by the finance ministry and compared unfavorably to a 1.7 percent gain in April.

Meanwhile, the data arrived moments after the Bank of Korea’s monetary policy meeting minutes showed policymakers’ concerns over slowing consumption, before slashing interest rate to a record low of 1.25 percent by a majority vote.

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