TOKYO (Reuters) – Japanese household spending rose less than expected in July, government data showed on Friday, as consumers remained wary of opening their wallets amid rising prices.
Consumer spending rose 0.1% year-on-year in July, compared with the median market forecast of 1.2% growth. On a seasonally adjusted, month-on-month basis, spending fell 1.7% versus an estimated decline of 0.2%.
Data released a day earlier showed Japan’s inflation-adjusted wages rose for the second straight month in July, largely thanks to an increase in summer bonuses. The basic wage, or regular wage, rose at its fastest pace in nearly 32 years, reflecting the outcome of wage negotiations between employers and workers this spring.
But an administration official said the big test would be whether real wages continue to rise in August and beyond, without the seasonal factor of summer bonuses.
In addition to solid wages and persistent inflation, robust consumption is one of the factors the Bank of Japan says is important in its decision to raise interest rates further.
The BOJ ended negative interest rates in March and raised the short-term interest rate to 0.25% in July. The bank believes the economy is making progress toward sustainably achieving its 2% inflation target.
The Japanese government last month raised its economic outlook for the first time in more than a year, amid signs of improvement in personal spending, which accounts for more than half of the Japanese economy.
(Reporting by Satoshi Sugiyama; Editing by Himani Sarkar and Lincoln Feast.)
