Japanese Household Spending Falls Seventh Straight Month

Japanese household spending fell by 3.3% in June from a year earlier, marking the seventh consecutive monthly decline. Data from the Ministry of Internal Affairs and Communications indicates that spending on food, utilities, transportation, and apparel led the downturn, although outlays for education and home maintenance increased.

Sanae Takaichi, the Prime Minister of Japan, has responded to the inflationary pressure by implementing utility and gasoline subsidies. She also announced a temporary reduction of the food sales tax from 8% to 1%, which is scheduled to take effect in April 2027. These measures aim to stabilize consumer sentiment as inflation continues to weigh on households despite a 1.6% rise in real wages.

Bank of Japan Governor Kazuo Ueda warned of upside risks to the price outlook as inflation approaches the central bank's 2% target. While consumer spending remains weak, some economists expect overall second-quarter GDP growth to remain positive.