Japan January household spending increases for the first time in 6 months

People wearing masks stand outside a store with infection prevention instructions on its window in the Harajuku shopping district amid the coronavirus disease (COVID-19) outbreak in Tokyo, in Japan, August 9, 2021. REUTERS / Androniki Christodoulou

TOKYO, March 11 (Reuters) – Japanese household spending rose for the first time in six months in January on an annual basis, largely due to weakness in the previous year, even as the rapid spread of the COVID-19 Omicron variant likely weighed on consumption later in the month.

Rising energy prices following Russia’s invasion of Ukraine in late February also threaten to stifle consumer and business spending in the import-dependent economy. Analysts have lowered their growth forecasts for Japan, with some forecasting a contraction this quarter.

Household spending rose 6.9% in January from a year earlier, government data showed on Friday, against a median estimate by economists of a 3.6% gain.

This followed a 0.2% decline in December.

The strong year-on-year reading reflects a 6.0% decline in January 2021 when COVID-19 state of emergency restrictions were imposed, a government official said during a briefing. hurry.

Consumer spending on services such as restaurants, hotels and transportation led the year-on-year growth, while electricity and food products saw weaker demand in January, the data showed.

To combat the rapid spread of the Omicron variant of the coronavirus, Japan reinstated restrictions on dining hours in around 70% of its areas later this month. Read more

Nationwide infections peaked in early February at a daily level of more than 100,000 cases, but restrictions have been extended in some areas, including the capital Tokyo, until the end of this month. Read more

Month-to-month spending contracted 1.2% in January on a seasonally adjusted basis, against a 3.0% loss forecast in a Reuters poll and after growing 0.1% the previous month, according to the data.

The world’s third-largest economy recorded annualized growth of 4.6% in the final quarter of 2021 as pent-up consumer spending emerged following a drop in coronavirus cases, according to a revised official estimate this week. Read more

But its recovery has been tepid and uneven compared to most other major economies, leaving the Bank of Japan no choice but to pursue ultra-loose monetary policy even as many of its peers begin to recall the measures. emergency operations deployed during the first year of the pandemic.

Economists expect Japan’s economy to stay flat or contract in January-March, with domestic demand still weak and the war in Ukraine weighing on global growth. Read more

Reporting by Kantaro Komiya; Editing by Cynthia Osterman

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