Japan’s consumer spending dips for 13th consecutive month in March

Japanese consumer spending: Consumer spending in Japan continued its downward trend for the 13th consecutive month in March, posing challenges for policymakers aiming to stimulate real wage growth, a crucial factor for potential central bank rate hikes.

Official data released on Friday revealed a 1.2 per cent decline in household spending compared to the previous year, diverging from economists' expectations of a 2.4 per cent decrease and following a 0.5 per cent downturn in February. On a seasonally adjusted basis, month-on-month spending also fell by 1.2 per cent, surpassing forecasts of a 0.3 per cent contraction and contrasting with February's 1.4 per cent increase.

The discouraging figures emerged following recent labour ministry data indicating consecutive annual declines in real wages, as the surge in living costs outpaced nominal wage increases despite the largest pay hikes in approximately three decades.

The persistent weakness in household consumption is a key concern for policymakers striving for sustained economic growth, driven by strong wage increases and solid consumer expenditure.

Additionally, separate data released on Friday indicated that Japan's current account surplus expanded to ¥3.40 trillion ($21.9 billion) in March, slightly below economists' median forecast of ¥3.49 trillion in a Reuters poll.

For the fiscal year concluding in March, Japan recorded a record current account surplus of ¥25.339 trillion, reflecting a trade surplus, declining commodity prices, and significant gains in primary income from overseas direct investment.

(With Reuters inputs)