Household spending jumped 5.1% in August from a year earlier, as Japan had its first summer in three years without anti-coronavirus curbs, prompting consumers to spend despite rising costs of living darkening the economic outlook, government data showed on Friday.
Japanese households spent on average 289,974 yen ($2,000), up for the third consecutive month. But real wages fell 1.7% from a year earlier, down for the fifth consecutive month, threatening to dampen consumer sentiment and posing a challenge to the government and the Bank of Japan.
Rising energy and consumer staples prices weighed on consumer confidence in the absence of wage growth, which was not seen in Japan for years. from Japan Core consumer inflation increased by 2.8% in August.
Prime Minister Fumio Kishida calls on Japanese companies to consider keeping wages at least in line with accelerating inflation in union-management wage negotiations next spring.
Stronger wage growth is also a critical factor for the Bank of Japan which still considers it necessary to maintain its ultra-low interest rate policy to protect the economy from the surge in commodity prices, amplified by the recent sharp drop in the yen.
Spending on entertainment, hotel stays and travel packages increased by 20.6%, while spending on transport and communication increased by 11.6%. Ministry of Interior and Communications said.
Health and medical expenses increased by 15.1%, Japan saw an increase in COVID-19 cases caused by the Omicron variant of the coronavirus this summer.
Japanese people spent less on furniture and household items than a year earlier, when many parts of the country were under a COVID-19 state of emergency. The figure was down 10.8%, due to reduced spending on air conditioners and other appliances.
The latest data is a key indicator of private consumption, which accounts for more than half of from Japan gross domestic product.
from Japan the economy has rebounded from the impact of COVID-19 countermeasures, but its pace of recovery has been relatively slow compared to other major economies like United States.
Japan should aim for an economic growth rate of 2.0% to 2.5% in real terms in fiscal years 2022 and 2023 by promoting wage increases that can support consumers, members of the private sector said earlier this week sitting on a government panel.
The government is planning a new economic package for the end of October which will include measures to ease the pain of inflation on households.
© Kyodo News International, Inc., source Newswire