Japan’s households cut back spending as Kishida considers measures

Japan’s households cut back spending in July as persistent inflation continued to erode purchasing power, adding pressure on the government to ramp up aid when it unveils a fresh batch of economic measures in coming weeks.

Outlays dropped 2.7% in July from the previous month — the biggest fall since February 2022 — as consumers pared back on cars and telecommunications, internal affairs ministry data showed Tuesday. Spending was also down 5% from a year earlier, twice the amount forecast by analysts.

The weak data add to signs that the economy’s recovery is struggling to build momentum domestically as inflation continues to outpace wage gains and consumer spending remains below pre-pandemic levels. Key consumer prices rose 3.1% in July from a year earlier.