Japan's Dec household spending falls for fifth straight month

[TOKYO] Japan's household spending posted an annual drop for the fifth straight month in December, as consumer demand struggled to recover before a resurgence in coronavirus infections due to the Omicron variant.

The extended spending decline casts a cloud over the broader recovery prospects of the world's third-largest economy, which has yet to return to pre-pandemic levels largely due to weakness in consumer demand.

Real wages posted their biggest monthly fall in 19 months in December, separate data showed, as global inflationary pressures and a rise in part-time workers hurt households' purchasing power.

Household spending fell 0.2 per cent in December from a year earlier, government data showed, weaker than the market forecast of a 0.3 per cent gain in a Reuters poll.

The month-on-month figures were nearly flat, gaining 0.1 per cent, weaker than a forecast 0.7 per cent rise.

The weak figures raise some concerns for policymakers hoping a rebound in consumer demand will support the economy as higher import costs due to soaring global inflation are squeezing corporate profits.

Government data on Tuesday also showed inflation-adjusted real wages lost 2.2 per cent year-on-year in December, the biggest fall since a 2.3 per cent drop in May 2020, and boding ill for a stronger economic recovery.

Japan's economy is expected to have grown an annualised 5.8 per cent in October-December due to low Covid-19 cases at the time, but the recent spread of the highly infectious Omicron variant has cast doubts on the strength of service spending. REUTERS