–Slight Drop Led by Lower Spending on Telecommunications Charges
–Spending on Hotels, Transport Continues Rising on Govt Tourism Support Program
–January Real Household Income Posts 4th Straight Y/Y Drop on High Costs for Food, Utilities
By Max Sato
(MaceNews) – Japan’s real household spending posted an as-expected slight drop on the year in January, with more people switching to discount mobile communications plans amid rising costs for food and utilities, but the pace of decline slowed as the economy continued reopening amid the eighth wave of the pandemic, data released Friday by the Ministry of Internal Affairs and Communications showed.
Expenditures rebounded sharply on the month after an unexpected second consecutive dip in December.
Some people continued traveling and eating out more freely, taking advantage of the government’s discount program launched in October and resumed in January after a brief suspension during the yearend and new year holidays, while others remained cautious about stepping out.
The key points from the monthly Family Income and Expenditure Survey on Households:
* Real average spending by households with two or more people slipped 0.3% on the year in January for the third straight drop after falling 1.3% in December and coming in line with the median economist forecast of a 0.3% fall (forecasts ranged from a 1.2% drop to a 0.3% gain). It was the sixth decrease in 12 months. November’s 1.2% drop was the first in six months following a 1.2% rise in October.
* The decrease in January was led by lower spending on telecommunications fees, which pushed down overall expenditures by 0.54 percentage point, as well as fish and grains (rice and noodles). Mobile phone users continued switching to discount plans while the number of landline users has been shrinking. People have been spending less on groceries, particularly fish, compared to the earlier phase of the pandemic when households had cooked more at home to avoid contact.
* On the upside, spending on hotels and eating out as well as air and land transportation continued increasing in January compared to a year earlier, when the government urged restaurants and bars to cut business hours and people to stay home during the Omicron storm. In 2022, the government resumed restrictions on social and economic activities in 35 of the 47 prefectures in late January and extended strict Covid rules for Tokyo and 17 other jurisdictions until March 21.
* On the month, real average household spending rebounded a seasonally adjusted 2.7% in December after falling 1.4% (revised up from a 2.1% drop) in December, a revised 0.4% in November and rising a revised 0.7% in October. It was the sixth increase in 12 months and stronger than the consensus forecast of a 1.1% rise (economist forecasts ranged from a 0.3% dip to a 1.5% rise). The real spending adjusted index stood at 103.6 in January, reaching the highest point since 104.9 in April 2021.
* The average real income of households with salaried workers posted the fourth straight year-on-year drop, down 1.7% (up 3.3% in nominal terms) in January, after falling 0.4% (up a nominal 4.4%) in December. The annual consumer inflation rate was above 4% as more firms are passing higher costs onto consumers.
* The main bread-earner’s real income in the average household marked the first drop in two months, down 2.8% (up 2.2% in nominal terms) in January, after rising 1.3% (up a nominal 6.2%) in December, which was the first year-on-year increase in nine months led by yearend bonus payments.
* The average spouse income posted the 12th straight rise in January, up a real 8.9% (up a nominal 14.5%), after rising 8.5% (up a nominal 13.7%) the previous month. Firms tend to use non-regular workers as buffers during economic swings. As the economy reopens further, retailers, hotels and restaurants are hiring more people.
Real Wages Slump; Gradual Pickup in Nominal Base Wages Intact
The gradual pickup in nominal wages in Japan continued at the start of the year while real wages plunged for the 10th straight year-on-year drop, data released Tuesday by the Ministry of Health, Labour and Welfare showed.
Total monthly average cash earnings per regular employee in Japan posted their 13th straight year-on-year rise, but the pace of increase slowed to a preliminary 0.8%, after surging a 4.1% (revised down from 4.8%) in December and rising 1.9% in November. The sharp gain in December was led by winter bonus payments that were concentrated at the end of the year.
In real terms, average wages slumped a preliminary 4.1% on year after edging down 0.6% (revised down from a 0.1% rise) in December and falling 2.5% in November.
To calculate real wages, the ministry uses the overall consumer price index minus owners’ equivalent rent, which surged 5.1% on year in January. It was well above the 4.0% rise in both the total CPI and core measure (excluding fresh food) for the month.
Base wages rose 0.8% on year, marking the 15th straight gain after rising a revised 1.4% in December and 1.5% in November. The key indicator for overall wages has been on a modest recovery trend this year.