Japan household spending posts biggest drop in nearly a year as wages fall
Japan`s household spending suffered the biggest annual decline in nearly a year in February as inflation-adjusted wages continued to fall, data showed on Friday, suggesting the economy`s longest run of growth since the 1980s asset bubble has peaked.
A slowdown in consumption would be an additional headache for Japanese policymakers, who fret the yen`s recent rises and fears of a trade war could hurt the export-reliant economy.
Household spending fell 0.9 percent in February from a year earlier, government data showed, confounding a median market forecast for a 0.3 percent gain.
The drop, which followed a 1.9 percent increase in January, was the biggest since a 1.4 percent fall in April last year.
"The pick-up in consumption seems to be stalling," a government official told a briefing, offering a gloomier view than last month when the government said consumption was recovering.
Separate data showed wages fell for the third straight month in February, reinforcing the view the Bank of Japan`s 2 percent inflation target will remain a distant goal and keep the bank from dialling back stimulus any time soon.
Friday`s string of data comes in the wake of a BOJ survey that showed business sentiment souring for the first time in two years, suggesting that the strong yen and escalating U.S.-China trade frictions are taking their toll on confidence.
Consumption has been a soft spot in an otherwise robust recovery, hampering the BOJ`s efforts to achieve its inflation target as firms remain wary of raising prices for fear of scaring away cost-sensitive households.
Japan`s economy expanded an annualised 1.6 percent in the October-December quarter, marking the eighth straight quarter of gains, on robust global demand and capital spending.
But core consumer inflation stood at 1.0 percent in February, well below the BOJ`s 2 percent target, as slow wage growth keeps consumers from increasing their spending.
Corporate Japan expects to see only minimal inflation in a year, a BOJ survey showed on Tuesday, indicating the difficulty the bank faces in hitting its elusive price target.
Some analysts say the central bank could be forced to cut its rosy inflation forecasts again when it conducts a quarterly review of its projections at a monetary policy meeting on April 26-27.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.