Japan household spending falls 6.8% in September, sharpest drop since 2020

Japanese household spending fell more than expected in September, dropping for a 10th consecutive decline as bad weather and sustained weakness in the yen weighed on private spending. The fall was the largest since September 2020.

Spending misses forecasts

Household spending fell 6.8% year on year in September, according to data released Tuesday by the internal affairs ministry. Market expectations had predicted a 3.1% decrease. On a month-to-month basis, seasonally adjusted spending fell 2.8%, contrary to market forecasts that had anticipated a 0.3% increase.

Bank of Japan in focus

The Bank of Japan will consider the data as it evaluates whether to raise interest rates further. Many analysts expect the central bank to implement its next rate increase as soon as December.

Wages offer a contrast

The spending data contrasts with recent wage figures. Japan's real wages grew for the ninth consecutive month in September, according to data released last week. Nominal wages increased at the fastest rate since January 1997.