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ECONOMY > Economic Indicators

Japan’s March household spending down 6.0%, biggest drop in 5 yrs

  • May 8, 2020
  • , Kyodo News , 1:18 p.m.
  • English Press

Japan’s household spending fell 6.0 percent in March from a year earlier, logging the largest drop in five years amid government calls for the public to stay at home to curb the further spread of the new coronavirus, government data showed Friday.

 

Spending in real terms by households with two or more people was 292,214 yen ($2,750), the Ministry of Internal Affairs and Communications said.

 

A ministry official told reporters the spread of the virus reduced spending on activities such as eating out and leisure as people avoided nonessential outings.

 

Household spending fell for the sixth consecutive month since October last year, when the consumption tax was raised from 8 percent to 10 percent.

 

The 6.0 percent year-on-year decline was the steepest fall since a 10.6 percent plunge in March 2015 caused by a last-minute surge in demand the previous year ahead of a consumption tax hike from 5 percent to 8 percent in April 2014.

 

“So-called ‘nest-dweller consumption’ such as expenditures on foodstuffs for cooking at home increased, but the negative effect caused by people refraining from going out had more impact,” the official said.

 

As for April, the official predicted the downward trend would continue due to the state of emergency declared over the virus pandemic by Prime Minister Shinzo Abe.

 

The declaration was issued on April 7 for Tokyo, Osaka and five other prefectures and later expanded to cover the rest of the country and extended to May 31.

 

“We shouldn’t assume that the figure touched rock bottom in March,” the official added.

 

By category, outlays for culture and recreation were down 20.6 percent, the largest contributor to the overall drop, with those for domestic and overseas package tours plummeting 83.2 percent from a year earlier.

 

In the same category, meanwhile, expenditures on game consoles and software more than doubled and those on internet connectivity rose 12.4 percent, apparently reflecting longer hours people spent at home.

 

Food expenses overall fell 2.4 percent, with those on dining out decreasing 32.6 percent, while expenditures on meat and grains were up 10.3 percent and 9.5 percent, respectively.

 

Social expenses such as congratulatory money and outlays for suits and other formal clothing also declined. The official said those might have been caused by a spate of cancellations of various events including graduation ceremonies.

 

After adjusting for inflation, the average monthly income of salaried households with at least two people was up 1.5 percent this March from a year earlier to 490,589 yen.

 

Household spending is a key indicator of private consumption, which accounts for more than half of Japan’s gross domestic product.

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