Families loosen their purse strings

Data released Friday continued to show an economy going in opposite directions, with average income on the wane but household spending on the rise.

The Management and Coordination Agency reported that families whose main breadwinners are company employees spent more in February than they did a year earlier.

Households of salaried workers spent an average of 311,775 yen, up an inflation-adjusted 3.8 percent from a year earlier and a seasonally adjusted 2.6 percent from January, the agency said in a preliminary report.

Wage-earning households account for roughly 60 percent of Japan’s total household spending.

Although it was the first month-on-month rise in seven months, it was also largely an anomaly, since 2000 is a leap year with the extra day landing at the end of February.

That helped push spending up by the largest margin since March 1997, when people rushed into stores ahead of a hike in the consumption tax from 3 percent to 5 percent.

Adjusting for the extra day, however, the agency said the average outlay of the 4,725 families surveyed inched ahead 0.5 percent.

Despite the spending spree, average household income fell a real 0.9 percent year on year to 485,865 yen, declining for the eighth successive month.

Regular income earned by the lead breadwinner, however, rose for the first time in six months, by 0.5 percent to 380,412 yen.

Disposable income was unchanged in real terms at 408,767 yen, thanks to a 6.3 percent drop to 77,098 yen in nonconsumption expenses, such as taxes and social security costs.

The propensity to consume, or the ratio of household spending to disposable income, came to 71.5 in February, up from January’s 70. Average spending increased for such goods and services as automobiles, personal computers, video cameras, housing renovation, telecom charges and education fees, the agency said.

Of the 10 spending categories, that of transport and telecommunications jumped 14.3 percent due to an increase in auto purchases and use of telecom services.

Expenditures continued to fall in the food and clothing categories, but their margins of decline were smaller, at 1.2 percent and 1.6 percent, respectively, compared with the previous month’s 3.9 percent and 13.7 percent.

Tokyo prices fall 0.6%

Consumer prices in Tokyo took a record 0.6 percent tumble in fiscal 1999 over the previous year due mainly to lower prices of vegetables and textile products, the Management and Coordination Agency said in a preliminary report released Friday.

It is the biggest drop since fiscal 1971, the latest year for which comparable data are available, and the second annual fall in Tokyo’s 23 wards after a 0.4 percent decline in fiscal 1995, the agency said.

It said the consumer price index stood at 101.5 for fiscal 1999, which ended Friday, against the base of 100 for 1995.

The index is viewed as an early indicator of nationwide price movements.

Hideyuki Suzuki, head of the Economic Planning Agency’s Price Research Division, attributed the decline to an oversupply of fresh vegetables in the second half of the year, a standstill in personal consumption and the yen’s appreciation against the dollar.

Excluding volatile prices of perishable foods, however, the index dropped 0.2 percent to 101.6, which is considered stable, he said.

For March alone, Tokyo’s CPI came to 100.9, up 0.2 percent from the month before for the first upturn in a half year, but down 0.7 percent from a year earlier for a record seventh consecutive monthly fall.

A 5.5 percent hike over February in clothing prices helped raise the index, but the margin of the gain was not as large as the same month last year, the official said.

Prices of fresh vegetables and fruits continued to drop compared with the year before. Excluding perishables, the index rose 0.1 percent over February but fell 0.4 percent from a year earlier to 101.1.

Prices in the entire services sector fell 0.1 percent in March from a year earlier for the first decline on record.

On a nationwide basis, the CPI for all goods and services was 101.3 in February, down 0.1 percent from a month before and 0.6 percent from a year earlier for the sixth straight monthly drop.

Excluding perishables, the nationwide CPI came to 101.6, down 0.1 percent from January and by the same margin over the year before.