Japan’s household spending hits record slump as travel, dining out suffer

May had seen Japan’s household spending declining at its most rapid pace. This drove the world’s third-biggest economy further into decline as consumers heeded authorities’ mandate of staying at home to contain the novel coronavirus pandemic.

The country’s household spending extended its 11.1% drop in April as it fell 16.2% in May from a year earlier, government data showed on Tuesday. This came to be the fastest pace the index had recorded since comparable data became available in 2001. More so, the reading came sharper than the median forecast of a 12.2% contraction.

The decline in spending will prompt policymakers to heighten their measures in restoring confidence among businesses and in particular consumers. In addition to this, any recovery in spending is expected to be gradual and fragile since households are still cautious even after lockdown restrictions were lifted in May.