August Sees a 2.5% Drop in Household Spending in Japan

08 Oct, 2023

August Sees a 2.5% Drop in Household Spending in Japan

In August, Japan experienced a 2.5% decline in household spending compared to the previous year, primarily due to the impact of rising prices, according to government data released on Friday. Households consisting of two or more individuals had an average expenditure of 293,161 yen ($1,975), marking the sixth consecutive month of decline. However, this decline was less severe than the 5% drop observed in July, as reported by the Ministry of Internal Affairs and Communications.

Breaking down the categories, food expenses, representing approximately one-third of household spending, fell for the eleventh consecutive month, decreasing by 2.5%. This decrease was attributed to rising prices for items such as fish, meat, dairy products, and eggs, as reported by the Xinhua news agency.

Spending on education saw a significant decline of 13.6% in August, while healthcare expenditures also dropped by 11.2%. The decrease in healthcare spending was attributed to reduced demand for items such as masks and thermometers.

In contrast, there was an increase in spending related to outings, as it marked the first summer vacation season following the downgrading of Covid-19's legal status to category V. Spending on dining out increased by 15.2%, and expenditures on overseas packaged tours surged by 54-fold, according to the data.

Household spending is a crucial indicator of private consumption in Japan, accounting for more than half of the country's gross domestic product (GDP).

Furthermore, separate data from the labor ministry, also released on Friday, revealed that Japan's real wages declined for the 17th consecutive month in August, dropping by 2.5%. This decline was attributed to ongoing price increases surpassing salary growth.