Japan Household Spending: Updated Feb. 15, 2024

 

Japan's household spending in Oct. falls 2.5% due to hot weather

Article Source: https://mainichi.jp/english/articles/20231208/p2g/00m/0bu/026000c

Article:

TOKYO (Kyodo) -- Japan's household spending in October fell 2.5 percent from a year earlier, down for the eighth consecutive month, as the unusually warm weather drove up prices of some vegetables and prompted people to refrain from buying, government data showed Friday.

Households of two or more people spent an average of 301,974 yen ($2,097), the Ministry of Internal Affairs and Communications said. The rate of decline shrank slightly from a 2.8 percent drop in September.

Ideas:

Sometimes consumer buying is tied to the weather and sometimes the weather affects the growing seasons of fruit and vegetables. Most likely the drop in consumer spending might be related to a not so good growing season and an unusually hot summer, which delayed consumers buying winter clothes.

Of course the continued inflation challenge in Japan has forced Japanese consumers to reduce or limit their spending which might have been a factor too.

So a 2.8 percent drop in September and a 2.5 percent drop in October is a good sign that Japanese consumers are continuing to limit spending and or cutout spending on things they don't need.

Article:

The weak spending came as separate data showed inflation-adjusted real wages in October dropped 2.3 percent from the previous year for the 19th straight monthly fall, as wage growth failed to keep up with rising prices.

Nominal wages rose 1.5 percent to 279,172 yen for the 22nd consecutive month of growth, according to the Ministry of Health, Labor and Welfare.

The hotter-than-usual weather for the month led to lean harvests of tomatoes and green onions, driving up their prices, and prompted consumers to cut back on spending. The weather also slowed sales of other cold weather items, the internal affairs ministry said.

Ideas:

Real wages are adjusted for inflation and as inflation continues in Japan, wages might has less purchasing power if wages don't keep up with the rate of inflation.

Again, green onions and tomatoes were affected with a less than good growing season due to the hot weather.

And yes, because of the hot summer months, which was a record in Japan, decreases the buying of late fall and winter clothes.

But this is normal buying behavior in any country not just Japan, when the growing season drives up prices of fruits and vegetables and there was/is hotter than usual summer, which lasted into October.

Article:

By category, food expenditure, accounting for a third of household spending, fell 4.4 percent as people spent less on vegetables, seaweed and prepared food. Spending on preprepared lunch boxes such as sushi also declined.

Outlays on furniture and household products dropped 12.9 percent, led by durable items such as stoves and heaters amid the high temperatures. Spending on clothing and shoes also fell due to sluggish demand for winter fashion.

Ideas:

It appears spending on many things in Japan decreased as maybe Japanese consumers continue to cut back on things they don't need.

And again, the very hot summer in Japan, which lasted into October delayed to buying of stoves and heaters, which are important in Japan, as Japanese homes don't have proper heating compared to homes in other countries.

Spending on food might be a third of Japanese household spending but for the lower-income groups it might be even more as lower-income groups use more of their income on food than the higher-income groups.

Most likely, department stores, convenience stores, called conbinis in Japan, and specialized bento stores might be seeing large decreases in prepared lunch boxes called bentos in Japan.

Article:

"Prices are rising in general, but we think these spending patterns are largely attributable to the hot weather," an official at the ministry said.

In contrast, expenditure on transportation and communications grew 5.3 percent, as an easing chip shortage increased vehicle production and led to more purchases.

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

Ideas:

Agreed, for the most part, the super hot summer in Japan, which lasted longer than usual well into October might have affected the buying patterns of Japanese consumers as they delayed the buying of thing related to late fall and winter.

At one time, in 2021, or around that time, talking to a Japanese person on Skype, they said it is taking 6 months to get a new car order because of the semiconductor chip shortage related to new cars.

Household spending might account for half of Japanese GDP but, consumer spending is always a challenge as Japanese consumers don't spend like US consumers, and Japanese consumers/households are more savers than spenders.

And now add in inflation and maybe spending by Japanese consumers is less than needed or expected to increase economic growth.

Have a nice day and be safe!