Japan reported significant decline in household spending in January, marking the 11th consecutive month of contraction. The decrease of -6.3% yoy was well below expectation of -4.3% yoy, representing the steepest annual drop since February 2021. Furthermore, on a seasonally adjusted month-on-month basis, spending fell by -2.1%, starkly contrasting with the expected 0.4% increase.
The Ministry of Internal Affairs and Communications highlighted several one-off factors contributing to this pronounced decrease. Notably, reduction in new car purchases, attributed to factory suspensions, played a significant role. Additionally, lower energy bills, a result of unusually warm weather, further depressed spending levels.
Moreover, the Ministry pointed out that the comparison with the same month last year is skewed due to a temporary boost in spending from post-pandemic travel subsidies.
