Tuesday, July 23, 2024
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Japanese households are cutting spending as inflation remains persistent

Japanese households cut back on spending again in March as persistent inflation weighed on sentiment and government subsidies limited utility costs, although policymakers expect historic wage increases to catalyze recovery in the coming months.

Real expenditure fell by 1.2% from a year earlier and fell for the thirteenth month in a row, the Ministry of the Interior reported on Friday. The result compared with economists’ forecast of a 2.3% decline.

The year-on-year decline in March shows that households have continued to tighten their budgets as wage increases fail to keep pace with rising costs of living. Real wages fell for the 24th straight month in March, a period when a key gauge of consumer inflation remained consistently at or above the Bank of Japan’s 2% inflation target.

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