Japan June household spending falls on weather, Iran conflict clouds outlook
Price tags of items are displayed at a retail store in Tokyo, Japan, on Jul, 27, 2026. (Photo: REUTERS/Issei Kato)
TOKYO: Japanese household spending fell unexpectedly in June, government data showed on Friday (Aug 7), as weather-related factors weighed on outlays, while analysts expect private consumption to be subdued amid sentiment hit by the Middle East conflict.
Consumer spending dropped 3.3 per cent year-on-year, data from the internal affairs ministry showed, falling for a seventh straight month as it underperformed a median market forecast for a rise of 1 per cent.
On a seasonally adjusted, month-on-month basis, spending decreased 6.4 per cent versus an estimated drop of 3.1 per cent.
The indicator will be among factors considered by the Bank of Japan in deciding whether to raise interest rates as soon as September, though the data itself is unlikely to weigh heavily on the decision.
A ministry official attributed the June slump in outlays to typhoons and increased rainfall, while stopping short of blaming it squarely on the rising cost of living.
Still, the share of income allocated to consumption has been declining since late last year, the official added, a sign households may be putting more of their earnings into savings.
Japan's real wages grew 1.6 per cent in June from a year before, a sixth consecutive month of increases, labour ministry data showed this week.
Looking ahead, it may be difficult to expect solid growth in overall private consumption as the Iran war pushes up costs for key items such as food and energy despite subsidies, said Sota Takano, senior economist at Itochu Research Institute.
"If the situation suddenly improves dramatically, that would be a different story," Takano said, but saw the uncertainty as likely to persist, in which case, he added, "Sentiment is unlikely to pick up much."
