Retail sales fell 2.6 percent in August from a year earlier, the Ministry of Economy, Trade and Industry said. It was the steepest decline since March, when the country was battered by a huge earthquake and tsunami.

The latest data illustrates the fragile state of Japan's economy and will mean further scrutiny of the government's plan to raise taxes to help fund reconstruction from the March 11 disasters, say analysts.

Opposition to tax hikes has come from lawmakers charging that such a move could threaten Japan's economy, with exporters facing a soaring yen and as demand softens both at home and abroad and fears grow of a global slowdown.

A drop in private consumption helped push the world's third-largest economy into recession following the earthquake, tsunami and the nuclear disaster at the Fukushima Daiichi atomic power plant.

Consumer sentiment remained shaken in April and May, before sales saw a rebound in June and July.

The decrease in August came as electrical appliance and machinery sales fell 19.3 percent from a year earlier.

Sales of digital televisions had previously been spurred by the ending of analogue broadcasts in Japan in late July.

Auto-related sales plunged 18.8 percent, in an illustration of softer consumer sentiment and the inability of dealers to cope in the wake of a parts crunch caused in the aftermath of the disasters, when crucial factories were shuttered.

The Democratic Party of Japan (DPJ) aims to raise taxes to secure 9.2 trillion yen ($120 billion) in emergency funds to finance an extra budget.

The government is now aiming to submit a 12 trillion yen budget -- designed to finance recovery efforts -- to parliament in late October.