Japan’s December household spending beats expectations

JAPANESE household spending rose for the first time in five months in year-on-year terms in December and at a much faster-than-expected pace.

Consumer spending climbed 2.7 per cent in December from a year earlier, data from the internal affairs ministry showed on Friday, better than the median market forecast for a 0.5 per cent uptick. On a seasonally adjusted month-on-month basis, spending increased 2.3 per cent, versus an expected 0.2 per cent fall.

Consumption and wage trends are key factors the Bank of Japan (BOJ) is watching to gauge economic strength and determine the need for additional rate hikes.

The BOJ raised interest rates to 0.50 per cent in January, the highest in 17 years, signalling its confidence that rising wages will keep inflation stable around its 2 per cent target.

December’s pay data released on Wednesday showed inflation-adjusted wages rose 0.6 per cent year-on-year thanks to a winter bonus bump, with government officials expressing optimism that wage hike momentum is growing. REUTERS