TOKYO (Reuters) – Japan is expected to report its first year-on-year increase in household spending in five months, a Reuters poll showed on Friday, although the rise appears to be marginal, indicating that consumers remain reluctant to loosen their purse strings.
Spending likely rose 0.2% year-on-year in December, according to a Reuters poll of 16 economists, following a 0.4% slump in November. This would be the first growth since last July, when it edged higher by 0.1%.
Seasonal factors, including bonuses and colder temperatures boosting demand for winter clothing, likely contributed to the rise in consumer spending, said Daisuke Imai, an economist at Mizuho Research & Technologies.
Analysts said inflation, particularly in food prices, continued to put pressure on consumers.
“Although the environment surrounding consumption is gradually improving with the decline in wages coming to a halt, consumer confidence has not clearly recovered amid continued price rises,” said Chisato Oshiba, an economist at Dai-ichi Life Research Institute.
On a seasonally adjusted month-on-month basis, household spending probably dipped 0.5%, reversing a 0.4% gain seen in November.
The household spending data is due at 8:30 a.m. on Friday, Feb. 7 (2330 GMT Feb. 6).
Consumption and wage trends are key factors the Bank of Japan (BOJ) is closely monitoring to gauge economic strength and determine the need for an additional rate hike.
The Japanese central bank raised interest rate to 0.50% at a policy meeting in January, the highest in 17 years, signalling its confidence that rising wages will keep inflation stable around its 2% target.
BOJ policymakers have repeatedly said that the central bank will keep hiking rates if Japan makes progress in establishing a cycle where inflation drives wages and lifts consumption – thereby enabling firms to pass on higher costs.
(Reporting by Satoshi Sugiyama; Editing by Sherry Jacob-Phillips)
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