According to the Ministry of Internal Affairs and Communications, Japan’s household spending fell year on year in January, marking the third consecutive month of decline. Spending on households with two or more members dropped 0.3 percent in January to an average of 301,646 yen ($2,214).
The report highlights that household spending data is an important indicator of private consumption, which is one of Japan’s major economic drivers. Household spending accounts for more than half of gross domestic product (GDP).
The Japanese government has stated that private consumption slowed to 0.3% from an initial 0.5% due to soaring inflation. This is a result of rising product prices in shops and supermarkets, including higher electricity bills. Additionally, the weaker yen has further exacerbated inflation and affected Japanese household spending.
The continued decline in household spending could pose a significant challenge for Japan’s economic recovery. The Japanese government has been implementing measures to support the economy, including fiscal stimulus packages and monetary easing, but the impact of these measures on private consumption remains to be seen.
Economists are closely monitoring the situation and are calling for further measures to be implemented to support household spending and ensure a strong economic recovery in Japan.