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Straits Times
14 hours ago
- Automotive
- Straits Times
Japan's households boost spending by most since summer 2022
Consumption makes up more than half of Japan's economic output and could determine if the economy will enter or avoid a technical recession. TOKYO – Japan's household spending rose the most since the summer of 2022 in a sign that consumer may be getting used to persistent inflation and could support for an economy that is taking a hit from US tariffs. Outlays by households adjusted for inflation gained 4.7 per cent from a year ago in May, largely due to more spending on cars, the Ministry of Internal Affairs and Communications reported on July 4. The result beat the median economist estimate of a 1.2 per cent gain. The jump in cars this year helped inflate the overall number but was largely due to comparison with low volumes last year resulting from a safety certification scandal, according to an Internal Affairs Ministry official. Still, spending also grew for tourism both within and outside Japan while people also increased outlays on eating out. Consumption makes up more than half of Japan's economic output and could determine whether the economy will enter or avoid a technical recession. US tariffs including a 25 per cent levy on cars and car parts are weighing on Japan's exports, raising the risk that the economy may shrink again in the second quarter after contracting in the first three months of the year. 'The results are relatively good. But we need to take into account that the data tend to be volatile,' said Ms Harumi Taguchi, principal economist at S&P Global Market Intelligence. 'Temporary factors such as cars and travel pushed up the numbers, but it's unclear whether this indicates sustained strong consumption.' Around 64 per cent of economists polled in early June see the tariffs potentially causing a recession in the world's fourth-largest economy. So far Japanese carmakers have refrained from hiking prices in the US too much despite facing harsh tariffs, largely absorbing the costs and taking a hit to profits. Top stories Swipe. Select. Stay informed. Singapore Seller's stamp duty rates for private homes raised; holding period increased from 3 years to 4 Singapore Multiple charges for man accused of damaging PAP campaign materials on GE2025 Polling Day Asia Japan urges evacuation of small island as 1,000 quakes hit region World Trump's sweeping tax-cut and spending Bill wins congressional approval World Trump eyes simple tariff rates over complex talks, says letters will start going out on July 4 Sport A true fans' player – Liverpool supporters in Singapore pay tribute to late Diogo Jota Singapore Jail for man who recruited 2 Japanese women for prostitution at MBS Business More Singapore residents met CPF Required Retirement Sum when they turned 55 in 2024 Inflation in Japan remains persistently above the central bank's 2 per cent target. Nominal wages have been on the rise, but real wages adjusted for inflation have fallen for four months nonstop through April, meaning that a rise in paychecks has yet to offset the pain of inflation. May wage data are due on Monday. Ahead of an upper house election on July 20, Prime Minister Shigeru Ishiba is proposing fresh cash handouts to help households deal with inflation. Some opposition parties are pitching a sales tax cut as an alternative to ease the pain. Unlike in the US, where President Donald Trump openly pressures the Federal Reserve on the course of monetary policy, the Bank of Japan appears to be facing little political pressure over bringing down inflation. 'Inflation continues to hold down consumption,' said Ms Taguchi. 'Wages are rising, but real wages keep falling, so I do not expect consumption to strengthen. In addition, the outcome of trade negotiations with Trump will affect economic sentiment.' BLOOMBERG
Japan Times
27-06-2025
- Business
- Japan Times
Tokyo inflation eases as energy costs cool ahead of election
Inflation in Tokyo slowed for the first time in four months as energy price gains eased and the municipal government waived some water charges for households ahead of a national election likely to center on the cost-of-living crunch. Consumer prices excluding fresh food rose 3.1% in the capital in June from a year earlier, according to a Ministry of Internal Affairs and Communications release Friday. The median economist forecast was for a 3.3% gain. Overall inflation also came to 3.1%, slowing from 3.4% in May. That still keeps price gains well above the Bank of Japan's price goal of 2%, leaving the central bank on track to mull the timing of its next interest rate hike once uncertainties over global trade have cleared. Electricity prices rose 5.3% year on year, slowing from 10.8% in the previous month, while increases in prices for natural gas and fuel oil also slowed. Gasoline prices fell 1%, reversing from 6.3% gains in the previous month, and prices for water fell 34.6% year on year. "In today's data, the slowdown in rice price hikes and the drag from energy were pretty significant, and it really feels like policy factors pushed down the overall figure,' said Harumi Taguchi, principal economist at S&P Global Market Intelligence. "Going forward, since import prices have been coming down, the upward pressure isn't as strong as before.' The slowdown in price growth for Tokyo, which serves as a leading indicator for nationwide data, may offer some relief to Prime Minister Shigeru Ishiba ahead of a July 20 Upper House election. His Liberal Democratic Party experienced its worst election result on record in a Tokyo Metropolitan Assembly vote last weekend as public discontent persists over the elevated pace of inflation. Price-conscious voters will hit the polls next month after more than three years of inflation at or above the BOJ's 2% target. Ishiba has pledged cash handouts to ease the burden, while opposition parties have called for a first-ever cut to the sales tax. The prime minister last month resumed subsidies to bring down gasoline prices. The soaring price of rice, which more than doubled in May from a year earlier, has drawn national attention and the government responded with measures including the release of emergency stockpiles. On the heels of those steps, the average weekly rice price has dropped for four straight weeks, according to the agriculture ministry. In the latest month, rice prices rose 90.6% from a year earlier, easing from a 93.7% gain last month, but food prices excluding fresh food rose 7.2%, the fastest clip since October 2023. Various government actions are expected to help slow inflation through the summer months. In other data on Friday, Japan's jobless rate stayed at 2.5% in May, according to a separate release from the internal affairs ministry. The job-to-applicant ratio edged lower to 1.24, meaning there were 124 jobs offered for every 100 applicants, the labor ministry reported. Retail sales rose 2.2% in May from a year earlier, missing the consensus estimate of 2.5%, while they fell 0.2% versus April. A brief record of the BOJ's June meeting indicated a widening view among policymakers that inflation is running higher than they expected. The board's most hawkish member, Naoki Tamura, flagged that the central bank may need to hike rates before trade uncertainty clears due to rising inflation risks. "For the BOJ, whether consumption will firm up alongside prices and wages is important, but we can't rule out the possibility that consumption stays flat or even dips a bit,' Taguchi said. "I don't think this data alone is enough to justify an immediate rate hike.'
