TOKYO (Reuters) – Japan’s consumer spending unexpectedly plunged at its fastest pace in a year in March as real wages fell for the first time in 12 months on continued inflation, post-coronavirus pandemic It highlights the challenges facing the economy in achieving a strong revival of the economy.
Tuesday’s government data also added uncertainty about the Bank of Japan’s policy outlook amid a slowdown in the global economy and concerns about the financial sector.
“Price increases, moderated somewhat by the government’s energy subsidy program, are eroding households’ real purchasing power and putting downward pressure on consumption,” said Masato Koike, an economist at Sompo Institute Plus. .
Data showed household spending fell 1.9% year-on-year in March, with the median economist forecast rising 0.4% and 1.6% in February.
It recorded its biggest drop since 2.3% in March 2022, when Japan was still trying to curb the spread of the coronavirus.
On a seasonally adjusted month-over-month basis, spending fell 0.8% against an estimated 1.5% increase, marking the second straight month of decline after falling 2.4% in February.
Household spending increased 0.7% for the full fiscal year ended March 2022, slowing from 1.6% growth in fiscal 2021.
Separate data showed that real wages in Japan fell 2.9% in March, marking a year-long decline that began in April 2022 with consumer inflation at its highest level in decades.
Rising prices put a lid on Japan’s consumption-driven recovery from the pandemic, despite the benefits of easing restrictions on domestic shoppers and international travelers due to COVID-19.
Furthermore, large companies put an end to wage hikes for the first time in 30 years at labor-management talks in March, but whether this trend will spread to small and medium-sized companies depends on the outlook for the normalization of monetary policy under the new governor of the Bank of Japan, Kazuo Ueda. key to
Looking ahead, analysts say slowing inflation will lead to a recovery in real wages.
Japan’s economy is likely to expand at an annualized rate of 1.4% from January to March and is expected to continue growing at the same pace from April to June, according to the latest Reuters poll last month. economist showed.
Interviewed by Kantaro Komiya Edited by Shri Navaratnam
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