Japan Household Spending Drops 3.1% in August, Marking Ninth Month of Decline

Japan's real household spending fell 3.1% year-on-year in August, marking the ninth consecutive month of annual contraction. Although the decline was smaller than expected forecasts of 3.5% to 3.6%, month-on-month spending grew just 0.1%, trailing expectations of 0.5%. Average monthly consumption expenditure for two-or-more-person households reached JPY 310,975. The weak private demand, alongside elevated living costs and a 0.9% drop in real income for salaried households, poses challenges for the Bank of Japan's rate hike plans and limits momentum for the yen.