Japan department store sales hit 36-year low in 2016

Japan's department store sales fell to their lowest in nearly four decades in 2016, data showed on Friday, underscoring the fragile nature of the country's economic recovery.

Sales of clothing were sluggish as Japanese consumers tightened their purse strings on slow wage growth. Spending by overseas tourists, who once flocked to buy luxury items, peaked to the dismay of department stores that have become increasingly reliant on inbound tourism, analysts say.

"It's clear department stores took a hit from a slowdown in spending by Chinese tourists, who still shop but spend less," said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.

"I expect consumption to fare somewhat better this year, though Japanese consumers may not boost spending much if the rising cost of imports push up grocery bills."

Department store sales fell 2.9 percent in 2016 from a year earlier to 5.978 trillion yen ($52.1 billion), sliding below 6 trillion yen for the first time since 1980, data by the Japan Department Stores Association showed.

Sales in December fell 1.7 percent from a year earlier, marking the 10th straight month of declines, the data showed.

The data underscores the difficulty policymakers face in eradicating Japan's deflationary mindset and prodding consumers to boost spending.

Japan's economy is recovering moderately as exports and factory output pick up, reflecting improvements in overseas demand.

Private consumption has also shown signs of life after slumping last year, though many analysts expect any rebound to be modest as companies remain wary of raising wages.