Japan Household Spending: Updated Dec. 13, 2024.

 

Japan's household spending in October falls 1.3% amid rising prices

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Ideas:
The Japanese economy can't grow much if Japanese household spending or consumer spending doesn't pick up, but that has always been a challenge in Japan.

Seasonal factors play a role in spending too, as the warmer weather might have delayed the buying of late fall or winter clothes in Japan.

Japanese wages, in April only increased but the challenge is inflation increasing almost every month so the the benefits from wage growth doesn't last very long.

Spending on food, for most households of two or more people, and with normal incomes is probably not that much, but for the low income groups,  30 percent of their income for food might be a little too much.

Consumer spending, for most, will look for substitutes, if the foods they usually like become to expensive or they become too elastic, meaning the price increase became too much and again, they look for substitutes such as chicken instead of pork or beef.

Perhaps some of the ingredients used in chocolate might have increased too much as chocolate producers had to pass-on the price increase onto the retailers or the consumers.

Again, seasonal weather, such as the record high temperatures that lasted into September and October had an affect on late fall and early winter clothes buying.

Most likely, as the price of materials needed for housing renovations increase, households either delayed renovations or decided not to do them at all, until maybe prices decrease.

As inflation continues in Japan, Japanese families might have decided to not sent their children to after school programs, as inflation has reduce their disposable income levels

Consumer spending in Japan has never been a strong indicator as in the US, as consumers in the US are more spenders while consumers in Japan are more savers.

Consumer spending might be half of Japan's gross domestic product, but it might not be enough to increase economic growth in Japan.

Real wages are wages adjusted for inflation and as inflation continues in Japan, the real value of wages in Japan is not very good as inflation seems to outpace wage growth.

Nominal wages are wages not adjusted for inflation but real wages are adjusted for inflation, which means a wage earners purchasing power could be reduced if inflation increases.

An increase of 0.9 percent might not even feel or be noticeable to wage earners as again inflation might actually reduce what could have been more than 0.9 percent increase.

Purchasing power is the real indicator for wage earners or anyone in an economy, as it indicates how much a consumer can spend in relation to inflation.

It seems consumer prices in Japan have been increasing ever since the pandemic and while they might be slowing from 2.9 percent to 2.6 percent, the average consumer might not feel any difference between 2.9 and 2.6.

Wage earners can get two bonuses per year, one in the spring/summer and one in late fall or early winter, which might make-up for the lower salaries in Japan compared to the US.

And yes, real wages are dependent on price increases or decreases, and if the trend continues, they might be decreasing some, but will consumers feel anything different.

This might seem like the situation in Japan is beginning to improve but Japan has a long way to go to get back to the advanced economy level as Japan has slipped a lot and is now more like a developing economy, without the economic growth.

But its a good start if these numbers continue to improve and maybe Japan can see some real economic growth which it hasn't seen since the asset-bubble crash of 1989.

Have a nice day!