TOKYO :Japanese household spending fell in September for the second straight month, government data showed on Friday, as higher prices choked consumers’ appetite in a discouraging sign for the central bank’s plans to hike rates further.
Consumer spending fell 1.1 per cent from the year earlier, against the median market forecast for a 2.1 per cent decline. On a seasonally adjusted, month-on-month basis, it fell 1.3 per cent, versus an estimated 0.7 per cent drop.
“There are one-time bumps in consumption but it doesn’t last long,” said Takeshi Minami, chief economist at Norinchukin Research Institute. “The background to this is the high cost of living, and the deep-rooted desire to save money.”
Households have likely continued to cut back spending on food, opting for cheaper alternatives like chicken instead of beef, and saving more of their income, an internal affairs ministry official said.
The July-September average of consumer spending dropped 1.0 per cent compared with the same period a year ago, the official said.
Consumption and wage trends are among key factors the Bank of Japan (BOJ) is watching to gauge the strength of the world’s fourth-largest economy and decide how soon to raise interest rates.
September’s pay data released on Thursday showed inflation-adjusted wages falling for the second straight month despite nominal salary making gains and consumer inflation cooling.
The yen’s renewed softening with the election of Donald Trump as the next U.S. president could also hit consumption through higher import prices, although the BOJ could in turn be pressured to raise rates if the yen’s fall accelerates.
Japan will release preliminary July-September gross domestic product (GDP) data next Friday. The economy likely slowed sharply on sluggish consumption and capital spending, according to a Reuters poll.
