Japan’s October household spending expected to fall after sales tax hike

Japan’s October household spending expected to fall after sales tax hike

Japan’s October household spending is expected to fall in record pace for about 1^1/2 years after a hike in sales tax, according to economists’s poll on Friday.

Household spending will also likely fall 3.0% which would be its fastest pace of decline since May 2018 when it fell 3.8%.

Japan raised the sales tax to 10% from 8% on Oct. 1, a move that is seen as critical for fixing the country’s tattered finances.

From the previous month, household spending was seen falling 9.8% in October when the nation had previously raised sales tax.

“We expect spending on such as durable goods and luxury products fell after it was boosted ahead of the tax hike,” said Koya Miyamae, senior economist at SMBC Nikko Securities.

“Also a huge typhoon during the three-day holiday last month likely damaged service spending.”

The government will announce household spending data at 8:30 a.m. Japan time on Dec. 6 (2330 GMT, Dec.5).