By Ambar Warrick
Investing.com-- Japanese households reduced their expenditures in October, data showed on Tuesday, as pressure from rising inflation and a decline in the average wage income weighed on the spending capacity of consumers.
Household spending rose 1.2% in October from last year, beating expectations for growth of 1%, but falling sharply from last month’s reading of 2.3%, data from the Statistics Bureau showed.
Spending also slowed from last month , growing at a lower-than-expected 1.1% in October as compared to a 1.8% rise last month. Analysts expected month-on-month growth of 1.5%.
While private consumption was initially boosted by the relaxing of most anti-COVID measures in Japan this year, it has steadily trended lower due to pressure from high inflation and a weakening yen.
Japanese retail sales grew well below expectations in October, as consumer inflation surged to a 40-year high during the month. Price pressures are expected to have persisted at similar levels in November, as heralded by recent Tokyo inflation data.
Other readings on Tuesday also pointed towards continued pressure on household spending. Overall wage income of employees grew at a slowed 1.8% in October, as compared to a 2.2% rise in September, while average cash earnings grew at an annualized 1.8%, slower than expectations for growth of 2%.
The Japanese economy is facing increased headwinds from high inflation and a weakening yen, and had unexpectedly contracted in the third quarter, preliminary data recently showed.
While factors such as capital spending and industrial activity remained steady, a decline in consumer spending - a key driver of growth - is widely expected to keep economic growth subdued in the coming months.
Weakness in the yen, which was spurred by a growing rift between local and U.S. interest rates, has also contributed greatly to the economic slowdown by feeding inflation and making key fuel imports more expensive.
The yen was flat around 136.68 to the dollar on Tuesday.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.