• Kyodo


Last April’s consumption tax hike is estimated to have pushed down private spending by nearly ¥1 trillion for the six months through September, the Cabinet Office said in an annual economic report released Tuesday.

The downturn in private spending, which accounts for more than 60 percent of Japan’s gross domestic product, was equivalent to a contraction of 0.2 percentage points in GDP from April to September, the office said in the report titled “Japanese Economy 2014-2015.”

In the wake of the tax increase to 8 percent, the first hike in the consumption levy in 17 years, the economy shrank for a second straight quarter through September in inflation-adjusted terms.

As consumer prices rose due largely to the tax increase and the Bank of Japan’s drastic monetary easing, the pace of growth in real wages — nominal wages minus the effects of inflation — was sluggish, in turn dampening private spending, analysts said.

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