Japan's household spending rises for fifth month in a row

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Japan's household spending rises for fifth month in a row

TOKYO: Japanese household spending increased for a fifth month in October from a year earlier, data showed on Tuesday December 6 as easing coronaviruses prompted more people to shop and eat at restaurants.

Consumer spending, which accounts for more than half of the economy, is seen as a vital factor in the nation's economic growth. A tepid recovery in wages cloud the outlook as a result of an increasing inflation propelled by a weak yen.

The nation's real wages fell for the biggest fall in more than seven years in October due to consumer inflation, according to separate data released on Tuesday.

In October, household spending increased by 1.2 per cent from a year earlier, government data showed, slightly better than economists' median estimate of 1.0 per cent.

Spending increased by 1.1 per cent in October, for the second straight month in a row. Analysts had predicted a growth of 1.5 per cent for the month.

Consumption was supported by the government's travel subsidies to revive the tourism industry, which is beginning to recover from a slump caused by the COVID-19 pandemic.

But increasing price hikes in household goods and daily necessities could prompt consumers to rein in expenditure.

In October, Japan's core consumer prices increased by 3.6 per cent, bringing inflation to a 40 year peak, due to a weak yen and higher import costs. Consumer inflation exceeded the Bank of Japan's 2 percent target for the seventh month in October, but weak wages and services prices have kept the central bank cautious about withdrawing stimulus.

Japan's real wages fell by 2.6 per cent from a year ago, the biggest contraction since June 2015, according to data from the labour ministry.

In November consumer sentiment was affected by rising food and energy costs and an increase in coronaviruses infections. The consumer confidence index of the United States dropped to the lowest since June 2020.

Japan's economy fell for the first time in a year due to inflation and the global economic slowdown, as Japan's economy shrank by 1.2 per cent in the third quarter. According to a poll taken late last month, analysts believe that the economy will rebound an annualised 3.1 per cent in October-December.

In October, the government compiled a economic package of 39 trillion US $285.4 billion that was backed by an extra budget of 29 trillion to offset the pain of rising inflation.