Japan's Real Consumer Spending Falls 3.6% in July, Marking 8th Consecutive Monthly Decline
Macro
According to the Household Survey for July released by the Ministry of Internal Affairs and Communications on the 4th, real consumer spending for households of two or more people decreased by 3.6% year-on-year, marking the eighth consecutive month of decline. The margin of decrease widened from the previous month's 3.3%. This drop significantly exceeded the median market forecast of a 1.6% decline compiled by Reuters. Nominal consumer spending stood at 301,245 yen, down 1.5% year-on-year. On a seasonally adjusted basis, real spending rose 0.5% from the previous month, below the market expectation of a 2.6% increase. By category, spending on health and medical care fell 6.0%, the first decline in 14 months, and spending on health and medical supplies and equipment also dropped 2.5% due to higher prices for disposable diapers. Meanwhile, spending on education and entertainment rose 4.8%, with spending on game software and smartphone game charges increasing for the eighth consecutive month. Electricity charges fell 12.0% and gas charges fell 7.2%, contributing to the decline in utility costs. Takuya Hoshino, chief economist at Dai-ichi Life Research Institute, noted that while real wages are rising, concerns over the Middle East situation and price increases are intensifying. He said household consumption is weaker than expected and requires continued monitoring.
