Japanese Household Spending Falls in November

TOKYO (Reuters) – Japanese household spending fell in November, according to government data released on Friday, weighed down by stubbornly high prices that dissuaded consumers from loosening their purse strings.

Consumer spending dropped 0.4% in November compared to a year earlier, slightly better than the median market forecast of a 0.6% decline. However, on a seasonally adjusted month-on-month basis, spending increased 0.4%, versus an expected 0.9% fall.

Consumers cut back on spending for food, clothing, and entertainment, while expenditures in education and housing increased, the data showed.

Consumption and wage trends are key indicators the Bank of Japan (BOJ) is monitoring to gauge the strength of Japan’s economy and decide how soon to raise interest rates.

November’s pay data released on Thursday showed inflation-adjusted wages slid for the fourth consecutive month in November, affected by higher prices, even though base pay grew at the fastest pace in three decades.

The BOJ ended its massive monetary stimulus and raised interest rates to 0.25% last year. Some investors speculate that the next rate hike could occur at the Jan. 23-24 meeting, while others see a stronger chance in March.