Japan’s household spending unexpectedly declined in April as elevated inflation deterred discretionary spending, in a worrisome sign for policymakers after the economy began contracting even before U.S. tariff measures fully kicked in.
Outlays by households, adjusted for inflation, fell 0.1% from a year earlier, the Ministry of Internal Affairs and Communications reported Friday. The result compared with a median estimate by economists of a 1.5% gain. The decline was led by health care and miscellaneous spending, while outlays jumped 10.9% for housing.
The importance of consumer spending as an engine of growth in Japan has increased as U.S. President Donald Trump’s tariff campaign deals a blow to factory output and exports. Extra duties on steel and aluminum took effect in March, with tariffs on autos and a broad tax on other products starting in April. Domestic demand will likely be a key factor in determining whether Japan can avoid a technical recession after the economy shrank in the first quarter.
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