Japan July household spending falls 3.6% year/year

Japanese household spending declined 3.6% year-on-year in July, marking the eighth consecutive month of contraction and the sharpest pace since January 2024. This figure underperformed market expectations for a 1.6% fall. On a seasonally adjusted monthly basis, spending increased by 0.5%, reversing a 6.4% decline in June but missing forecasts for a 2.6% rise. Spending on food, utilities, and transport saw further declines, while expenditure on furniture and household goods rebounded. Analysts attribute the persistent weakness in consumer demand to consumers feeling the pressure of rising costs, despite some wage increases. Annual core inflation in Tokyo has accelerated, indicating broadening price pressures.