UPDATE 1-Japan household spending falls on persistent COVID-19 pressure

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(details, adds context)

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* August household expenses 3.0% yr/yr

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* COVID curbs, increase in infections may impact heat spending

TOKYO, Oct 8 (Businesshala) – Japan’s household spending fell by 3.0% in August from a year ago, government data showed on Friday, as the coronavirus pandemic weighed on consumption during the summer holiday season. There is a situation of emergency sanctions to deal with.

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The data is sickening to new Prime Minister Fumio Kishida’s efforts to revive the economy and distribute more wealth to households through higher wages.

The reduction in spending was worse than the average market forecast for a 1.5% decline and followed a 0.7% increase in July.

Month-on-month data showed a 3.9% contraction in August, the fourth straight month of decline, and compared expectations of a 2.0% decline.

The COVID-19 infection and subsequent restrictions hampered restaurant dine-ins and consumption of a variety of goods across the country, a government official said, adding that the rainy season also affected Discouraged visits of customers to shops.

Consumption has been a weak spot for the world’s third-largest economy as a spike in delta-type cases and a state of emergency restrictions barred households from shopping or eating out. Japan’s service sector activity declined for the 20th straight month in September, according to a recent private survey.

But analysts expect consumption to improve in the coming months as the lifting of restrictions from October and steady progress in immunizations has raised hopes of a pick-up in demand.

However, the economy faces fresh constraints from supply constraints, as a shortage of semiconductor chips and parts hampers automobile production, hurting exports.

Separate data on Friday showed inflation-adjusted real wages rose 0.2% in August from the same month a year earlier, largely due to the statistical base effect. (Reporting by Kantaro Komiya; Writing by Leika Kihara; Editing by Sri Navaratnam)


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