Japan’s household spending drops amid pandemic restrictions

Japan’s household spending experienced a sharper-than-expected decline in August. The curbs that were set in place to deal with the coronavirus pandemic when the country was in a state of emergency dragged down consumption during the summer holiday season and risked undercutting the economy’s recovery.

Government data released on Friday did not bode well for newly elected Prime Minister Fumio Kishida’s efforts to revive the country’s pandemic-hit economy and distribute more wealth to households through higher wages.

The 3.0% year-on-year drop in spending was worse than a median market forecast for a 1.5% decrease and followed a 0.7% rise in July.

Meanwhile, the month-on-month data showed a 3.9% contraction in August, the fourth straight month of losses, and compared with expectations for a 2.0% decrease.

The surge of COVID-19 infections that prompted nationwide restrictions hampered consumption in restaurant dine-ins and a wide range of goods from fashion items to furniture, according to a government official. The rainy season also deterred customers’ visits to stores.