Japan Household Inflation: Updated Nov. 21, 2023.

 

Japan household spending falls 5% in July, down for 5th month in row

Article Source: https://mainichi.jp/english/articles/20230905/p2g/00m/0bu/008000c

Article:

TOKYO (Kyodo) -- Japan's household spending in July fell 5.0 percent from a year earlier, the biggest drop in more than two years, government data showed Tuesday, as higher prices hit consumption.

Households of two or more people spent an average of 281,736 yen ($1,900), declining for the fifth consecutive month and marking the sharpest fall since a 6.5 percent plunge in February 2021, the Ministry of Internal Affairs and Communications said.

Ideas:

As the Japanese government lifted its COVID restrictions consumer demand increased for a while, but now maybe reality has set in with inflation hitting consumer spending as it dropped 5 percent in July.

As inflation continues to affect Japanese households they have less and less extra income to spend in the economy after just paying for their basic expenses.

While the US and its Federal Reserve increasing its key interest rate to try and curve inflation, the Bank of Japan seems to be taking the approach of just letting inflation run its course and not doing much compared to what the US or the EU is doing.

Article:

By category, spending on education decreased 19.8 percent as families curtailed outlays for cram schools in the face of soaring costs, a ministry official said.

Household expenditures declined 18.6 percent as spending on renovations fell as people spent less time at home following the easing of COVID-19 restrictions, the official said.

Ideas:

Its interesting while spending on education and cram schools have decreased in Japan, while in South Korea, spending on crams schools as increased. Inflation in South Korea is just as high but families continue to spend on extra education.

As inflation continues, families are finding ways or need to find ways to reduce spending on whatever, such as home renovations and from other articles spending on durable goods for the home.

Households will probably continue to cut-back on whatever they need to but back on, including spending going to restaurants and or short trips on the weekend.

But at the same time, inflation is still much an individual situation as not everyone or household spends the same on all things. Some households or individuals might not be that affected but some might be affected a lot.

Article:

Food expenditure, accounting for around one-third of household spending, declined 2.8 percent, amid rising prices for fish and meat.

Spending on medical supplies such as face masks and thermometers fell after the legal status of COVID-19 was downgraded to the same category as seasonal flu.

Ideas:

Food spending or expenditures are again an individual or individual households situation and not everyone buys the exact kind of food. 

But at the same time, supermarket prices have increased maybe households have reduced the buying of some products and or have found substitutes for what they need.

While the spending on face masks have decreased, Japanese, for the most part, wears masks more than other countries. 

However, in South Korea, where wearing masks has not been as much as Japan, there seems to be more wearing masks now, that before the pandemic.

Article:

"The impact of rising prices seems to be taking effect gradually," the official said.

Meanwhile, spending on accommodation and package tours increased 10.6 percent and 7.7 percent, respectively, as people traveled during their summer vacations after the removal of coronavirus restrictions.

The data is a key indicator of private consumption, which accounts for more than half of the country's gross domestic product.

Ideas:

An increase in prices, again, is very much an individual variable or household variable as not everyone or every household is affected the same way, as spending is very much individual.

Japanese domestic tourists were constrained during the pandemic so maybe now they are trying to make up for lost time and traveling a lot this summer despite the increase in prices.

Consumer demand makes up maybe 50 percent of Japanese GDP but related to other advanced economies its much lower. But at the same time Japanese consumers are not as big spenders as those in the US.

Japan is more of a savings country, or used to be, compared to the US, which is more or spending economy, where consumer spending is 60 percent or more of GDP.

Have a good day and be safe!