TOKYO, Sept 4 (Reuters) - Japanese household spending fell in July at the fastest annual pace in 2-1/2 years, government data showed on Friday, highlighting lacklustre private consumption ahead of a closely watched Bank of Japan meeting.
• Consumer spending fell 3.6% year-on-year, data from the internal affairs ministry showed, worse than a median forecast for a 1.6% drop and marking an eighth consecutive month of decline. Spending fell at the steepest pace since January 2024, when it dropped by 6.3%.
• On a seasonally adjusted month-on-month basis, spending edged up 0.5%, below a forecast for a 2.6% jump.
• Consumer spending will be among the factors the BOJ will scrutinise as it decides whether to raise interest rates as early as this month, though the data itself is unlikely to weigh heavily on the decision.
• A ministry official said consumers were selective in their spending, increasing outlays on entertainment and household goods while cutting back on food and transportation.
• The official stopped short of blaming the decline squarely on the rising cost of living, but analysts said consumers have been feeling the pinch from higher costs, with little sign of relief ahead.
• Masato Koike, senior economist at Sompo Institute Plus, said: "Although large wage hikes were achieved again in this year's spring wage negotiations, downward pressure on consumption is expected to intensify as higher prices become more pronounced going forward."
• Annual core inflation in Tokyo, a leading indicator of nationwide trends, accelerated in August for the third straight month, in a sign of broadening price pressures.
Reporting by Satoshi Sugiyama; Editing by Muralikumar Anantharaman and Tom Hogue
Source: Reuters