By Leika Kihara and Kaori Kaneko
TOKYO – Japan’s household spending rose for the ninth straight month in August, offering some relief for the export-dependent economy amid the US-China trade war, but a fall in wages points to further strains on consumers after a sales tax hike this month.
The mixed readings will keep policymakers under pressure to announce more fiscal and monetary stimulus measures to shield the economy from a recession, analysts say.
Household spending in August rose 1.0 percent from a year earlier, accelerating form a 0.8 percent increase in July but falling short of a median market forecast for a 1.2 percent increase, government data showed on Tuesday.
The ninth consecutive month of gains was the longest such streak since comparable data became available in 2001.
“Consumption appeared to have been fairly strong in August after weak spending in July, when bad weather kept consumers at home,” said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.
“But the outlook isn’t bright. Wage growth is weak and the effect of October’s sales tax hike will begin to show. Consumer sentiment has been pretty gloomy, which means risks to the outlook are tilted to the downside.”
Japan rolled out a twice-delayed increase in the sales tax to 10 percent from 8 percent on Oct. 1, a move considered critical for fixing the country’s tattered finances.
While the government has taken steps to ease the burden on consumers by offering vouchers and tax breaks, there are fears the higher tax could hurt an economy already feeling the pinch from global pressures. – Reuters