Japan's household spending logs biggest fall in almost 3 years

Japan's household spending shrank the most in almost three years, casting a cloud over the economy's growth prospects as the central bank mulls the timing for a widely expected interest rate hike.

Household outlays declined by 6.3 per cent in January from a year earlier, the biggest drop since February 2021, Japan's Ministry of Internal Affairs and Communications reported on March 8. It was the 11th straight decline and steeper than economists' estimate of a 4.1 per cent retreat. Spending fell 2.1 per cent from December 2023.

Personal spending has stayed weak in Japan as salary gains continue to lag behind inflation. Although cash earnings figures for January were better than expected, the 0.6 per cent fall in real earnings marked the 22nd straight month of declines.