Household spending in Japan increased year on year for the first time in six months. This was largely due to weak comparative data from the previous year, and the rapid spread of the COVID-19 virus slowed consumption toward the end of the month.
Household spending in Japan increased by 6.9% year-on-year in January.
Rising energy prices following Russia’s invasion of Ukraine in late February will hurt consumer and business spending in Japan’s import-dependent economy.
Consumer spending in service sectors such as restaurants, hotels and transportation is currently driving the Japanese economy. Demand for electricity and food declined in January.
Regarding the rapid spread of the COVID-19 virus, the Omicron variant in Japan again reduced restaurant hours in the region by about 70% in late January.
The Japanese economy is expected to contract in 1Q22 as domestic demand remains weak and the war in Ukraine hampers global economic growth.