Forex – Household spending in Japan rose less than expected in July, as consumers remained cautious about spending amid rising prices.
The slowdown in consumer spending growth has complicated the BOJ’s plans to raise interest rates further in the coming months.
Consumer spending rose 0.1% annually in July. Economists had expected a strong 1.2% growth. On a monthly basis, seasonally adjusted for data, spending fell 1.7%, compared with expectations of a 0.2% decline.
“There is a very high probability that consumer spending will turn negative again next month,” said Takeshi Minami, chief economist at Norinchukin Research Institute, adding that households appeared skeptical about whether price increases would continue next year.
Minami said the BOJ should confirm with relevant data before raising borrowing costs again, adding that the interest rate hike in July was made without considering the recovery in consumption.
An official from the Ministry of Interior said consumers were spending more on television and travel, while they were cutting back on spending on food and utilities and directing their income into savings due to rising prices in July.
