Prices push Japan's household spending down by 3.2 per cent
Japan's household spending in fiscal 2023 dropped a real 3.2 per cent from a year earlier, falling for the first time in three years, as rising prices prompted people to cut back outlays on food and other items, government data showed.
Households of two or more people spent an average of 294,116 yen ($1,890) per month in the fiscal year through March, the Ministry of Internal Affairs and Communications said. The data is a key indicator of private consumption, which accounts for more than half of the country's gross domestic product.
Japan's consumer prices have been rising on higher import costs inflated by a weaker yen, while real wages have been declining as salary increases failed to keep pace with inflation.
It was the first decline since the 4.9 per cent drop logged in fiscal 2020, when people refrained from going outside due to behavioural restrictions amid the coronavirus pandemic.
"While there are a myriad of factors contributing the drop, price hikes can be listed as a definite cause," a ministry official said.
In fiscal 2023, outlays for food, which account for about 30 per cent of household expenditures, fell 1.9 per cent, as prices climbed for a wide range of products such
For March, household spending fell a real 1.2 per cent from a year earlier to 318,713 yen, declining for the 13th consecutive month, a ected by a 12.3 per cent drop in outlays for electricity and gas. Those for entertainment dropped 5.7 per cent as travel demand decreased following the end of a government subsidy after the COVID-19 pandemic.
as bread, dairy products, seafood, meat and vegetables.
Outlays for education such as fees for cram schools dropped 1.4 per cent, while spending for household goods shed 5.9 per cent.
Expenditure for electricity and gas decreased 3.7 per cent, as mild temperatures in the winter reduced utility bills, according to the official.
For March, household spending fell a real 1.2 per cent from a year earlier to 318,713 yen, declining for the 13th consecutive month, affected by a 12.3 per cent drop in outlays for electricity and gas.
Those for entertainment dropped 5.7 per cent as travel demand decreased following the end of a government subsidy program for domestic travel after the COVID-19 pandemic, the official said.
Bucking the downward trend outlays for food rose 1.8 per cent, with people likely spending more as the month had an extra weekend, according to the official.
Japan posted its biggest current account surplus of 25.34 trillion yen (US$163 billion) in fiscal 2023, buoyed by record foreign investment returns and a sharp drop in its trade deficit on robust auto exports, government data showed yesterday.
A revival of inbound tourism also lifted the country's travel surplus to its highest level, helping boost last fiscal year's surplus, as the weaker yen made travel to and shopping in Japan cheaper for foreign visitors.
Primary income, which reflects returns on foreign investment, totalled 35.53 trillion yen, up 0.6 per cent from the previous year, boosted by higher overseas bond yields, which increased interest revenue, and a weak yen.
The trade deficit plunged nearly 80 per cent to 3.57 trillion yen after exports grew 2.1 per cent to 101.87 trillion yen while imports fell 10.3 per cent to 105.44 trillion yen, according to the preliminary
Fnindance report by the Ministry.
The overall surplus in the current account, one of the widest gauges of international trade, marked a roughly 2.8-fold increase from the previous year.
Resource-poor Japan's trade balance was deep in the red in fiscal 2022 due to surging imports amid higher energy prices. But the value of imports fell in the fiscal year ended March.
Exports, meanwhile, got a boost from strong auto demand in the United States, despite recession fears driven by aggressive interest rate hikes by the Federal Reserve. Outbound shipments from Japan topped 100 trillion yen for the first time.the yen's rapid depreciation against the U.S. dollar, reflecting the different policy stances of the Bank of Japan and the Fed, has raised concern about its negative impact on the Japanese economy.
A weak Japanese currency tends to be a plus for exporters as it boosts their overseas profits when brought back home but it also inflates import costs. The yen was 6.7 per cent weaker than a year earlier against the dollar and 11.2 per cent against the euro.
The travel surplus more than tripled to a record 4.23 trillion yen, just as March marked the first time that the monthly count of foreign visitors topped 3 million.
The surplus means spending by foreign visitors to Japan exceeded the amount spent by Japanese overseas.the uptick helped halve the country's services trade deficit to 2.45 trillion yen, though it failed to reverse the broader trend as increasing payments for digital and other services continued to weigh.
In March alone, Japan saw its current account surplus expand 44.0 per cent to 3.40 trillion yen, the highest for the month since comparable data became available in 1985. Primary income rose 1.4 percent to 3.44 trillion yen and the trade balance swung back to a 491.0 billion yen surplus.