TOKYO, Japan: Marking four months of consecutive growth, Japanese households increased spending in September from one year earlier, with shoppers enjoying their first summer without COVID-19 restrictions.
However, separate data showed that inflation, aggravated by the yen’s sharp depreciation, could stifle consumption, with real wages falling in September for the sixth straight month.
This week, government data reported that in September, household spending rose 2.3 percent from one year earlier, slightly lower than economists’ median estimate of 2.7 percent.
Spending rose 1.8 percent on a month-on-month basis after two months of contraction, compared with analysts’ expectations of a 1.7 percent September increase.
Accounting for more than half of the world’s third-largest economy, private consumption has benefited from the end of COVID-19 restrictions in March, while the easing of strict border controls last month could see foreign tourists propping up the economy amid the yen’s plunge to a 32-year-low.
The government is also conducting record currency interventions and compiling a $200 billion fiscal package to counter the cost of living crisis.
Of note, the Bank of Japan’s preferred measure of consumer inflation rose 3.4 percent in October in Tokyo, the fastest annual rate since 1989.
Labor ministry data released this week showed that while nominal wages posted their biggest growth in more than four years, Japan’s real wages fell 1.3 percent in September from one year earlier.