⌛ Did you miss ProPicks’ 13% gains in May? Subscribe now & catch June’s top AI-picked stocks early.Unlock Stocks

Japan household spending suffers biggest drop in 2-1/2 years; outlook not as gloomy

Published 09/04/2023, 09:42 PM
Updated 09/04/2023, 09:45 PM
© Reuters. FILE PHOTO: Shoppers walk through the rain in an Osaka shopping district in western Japan October 22, 2017.  REUTERS/Thomas White/File Photo
USD/JPY
-
JP225
-
JP225
-
JGB
-
TOPX
-
MIAPJ0000PUS
-

TOKYO (Reuters) - Japanese household spending suffered its biggest drop in nearly 2-1/2 years squeezed by rising prices, although volatility in some items meant the outlook might not be as gloomy as the headline figures suggested.

Japan's economy grew much faster than expected in the second quarter, helped by the end of COVID-19 curbs and a resurgence in inbound tourism, and analysts expect private consumption to support overall growth amid weakness in global demand.

The household spending fell 5.0% in July from a year earlier, official data showed on Tuesday, sliding for five consecutive months and more than the median market forecast for a 2.5% decline.

On a seasonally adjusted month-on-month basis, household spending was down 2.7%, versus an estimated 0.5% gain.

Spending on dining out, transportation, culture and entertainment services increased with an uptick of the number of people who went out, but there were declines in a wide range of areas such as food and housing, an official at the Ministry of Internal Affairs and Communications said.

"The impact of price hikes has been felt to some extent," the official said, though he noted that the 5.0% drop included items that fluctuate widely such as housing and automobile purchase.

Japan's core consumer price index, which includes oil products but excludes volatile fresh food prices, rose 3.1% in August followed by a 3.3% increase the previous month. It held above the Bank Of Japan's 2% inflation target for the 16th straight month.

On the whole, private consumption will continue to recover as economic activity normalises and the decline in real wages is expected to narrow, said Masato Koike, economist at Sompo Institute Plus.

"Rising wages and the normalization of economic activity will lead to a recovery in consumption," Koike said.

© Reuters. FILE PHOTO: Shoppers walk through the rain in an Osaka shopping district in western Japan October 22, 2017.  REUTERS/Thomas White/File Photo

That view was supported by a private survey showing Japan's service sector activity expanded at its quickest pace in three months in August, underpinned by robust consumer spending as inbound tourism regained momentum.

To view the data on the website of the Ministry of Internal Affairs and Communications, click here:

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.