Japanese Household Spending Falls for 8th Straight Month as Essential Costs Surge
Macro
Japan's Ministry of Internal Affairs and Communications reported that household spending in July fell 3.6% year-on-year, marking the eighth consecutive month of decline and exceeding analysts' expectations of a 1.6% drop. The decrease was primarily driven by expenditures on home repairs, rent, and automobile-related costs. Meanwhile, fresh food prices rose 7% year-on-year despite government measures to reduce energy costs. Although wages have increased, consumers remain cautious about spending, reflecting that prolonged inflation continues to pressure purchasing power and may slow Japan's economy in early Q3. Prime Minister Sanae Takaichi is set to proceed with measures to address the cost of living, including a plan to reduce the consumption tax on food and non-alcoholic beverages to 1% for two years starting in April 2027, along with extending measures to control gasoline prices.
