Spending by households rose 2.0 percent from a year earlier in January, up for the second straight month on more expenditure on home renovations, government data showed Friday.
Households with two or more people spent ¥296,345 ($2,660) in the reporting month after adjusting for inflation, according to the Ministry of Internal Affairs and Communications.
The ministry raised its assessment of household spending, saying it showed "signs of recovery," the first upgrade since last August. Previously, the ministry said household expenditure was "pausing in its recovery."
In January, spending on housing soared 18.0 percent from a year earlier, the highest growth among sectors, due to an increase in home renovations. Outlays on education also expanded 17.7 percent.
A ministry official said it is not certain whether the rise in household spending was caused by last-minute demand before a planned consumption tax hike from the current 8 percent to 10 percent in October.
Household spending is a key indicator of private consumption, which accounts for nearly 60 percent of Japan's gross domestic product.
The average income of salaried households with at least two people stood at ¥471,124, a 3.6 percent increase and the third straight monthly rise from a year earlier after adjusting for inflation.