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Economy

Japan household spending falls for 3rd straight month in April

TOKYO (Kyodo) -- Households in Japan cut back on spending for the third consecutive month in April, government data showed Tuesday, hurting the economy's prospects of returning to growth after a contraction in the first quarter.

Spending by households with two or more people fell 1.3 percent from a year earlier to 294,439 yen ($2,680), the biggest drop in 12 months, according to the Ministry of Internal Affairs and Communications. It declined 0.9 percent in February and 0.7 percent in March.

Expenditure on utilities fell in April as relatively warm weather during the month reduced the need to turn on air conditioning. Households also spent less on automobile purchases, food and vacations within the country.

The ministry downgraded its assessment of spending from "pausing in its recovery" to "showing weakness," while one of its officials said it remains to be seen if this is a continuing trend or a temporary soft spot.

The weakness in private consumption, which accounts for around 60 percent of Japan's gross domestic product, undermines the view that the world's third-largest economy will resume expansion in the April-June quarter after shrinking an annualized real 0.6 percent in January-March.

Gradual increases in wages have yet to spur a pickup in spending, a headache for the Bank of Japan, which is pursuing a 2 percent inflation target in the hopes that wage gains will loosen consumers' purse strings, giving businesses the confidence to raise prices.

Core consumer prices, excluding fresh foods due to their volatility, remain far below the BOJ's target, rising just 0.7 percent in April from a year earlier.

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