Japan household spending unexpectedly picks up, signals steady consumption recovery

[TOKYO] Japanese annual household spending unexpectedly grew in November, government data showed on Friday, rebounding from a sharp decline in October and aligning with a gradual recovery in private consumption.

Consumer spending rose 2.9 per cent year-on-year, internal affairs ministry data showed, defying the median market forecast for a 0.9 per cent drop.

On a seasonally adjusted, month-on-month basis, spending jumped 6.2 per cent, versus an estimated 2.7 per cent rise, the fastest pace since March 2021, the data showed.

An internal affairs ministry official said one-off, volatile categories, including automobile-related expenses, contributed to the November upside surprise.

Even excluding those factors, the official added, spending remained firm. Outlays on food increased for the first time in six months, particularly dining out, helped by extra holidays in November.

“The recovery in consumer spending is continuing,” the official said.

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The Bank of Japan (BOJ) raised its policy rate to a 30-year high of 0.75 per cent from 0.5 per cent last month, judging that companies would continue to lift wages steadily this year.

Governor Kazuo Ueda has said the BOJ would continue to raise borrowing costs if economic and price developments move in line with its forecasts.

Still, the underlying trend of inflation outpacing wage growth has not changed. Separate labour ministry data from Thursday showed inflation-adjusted real wages fell 2.8 per cent in November from a year earlier. REUTERS