Weak data puts pressure on Abenomics

Tokyo

PRIME Minister Shinzo Abe's Abenomics policies suffered a further blow to their credibility on Friday, as household spending in Japan slumped by just under 6 per cent in July compared to a year earlier - twice the level expected - in the wake of April's sales tax hike while factory output remained weak.

Other data for July showed that consumer prices rose by 3.3 per cent compared with a year earlier, suggesting that the Bank of Japan (BOJ) is on track to meet its 2 per cent annual inflation target by around the middle of next year. But with prices rising faster now than wages, real incomes in Japan are declining, dimming the outlook for consumer spending.