Japan Household Spending Falls at Fastest Pace Since Early 2024

Japanese household spending fell in July at its fastest annual pace in 2-1/2 years, according to government data released on Friday. The internal affairs ministry reported that consumer spending declined by 3.6% year-on-year, exceeding a median forecast of a 1.6% drop and marking the eighth consecutive month of decline.

This marked the steepest fall since January 2024, when it dropped by 6.3%. On a seasonally adjusted month-on-month basis, spending edged up 0.5%, below a forecast for a 2.6% jump.

The Bank of Japan will scrutinize this data as it considers whether to raise interest rates as early as this month. While the data itself may not be a decisive factor, analysts believe that consumers have been feeling the pinch from higher costs, with little sign of relief ahead.