Business / Economy

Household spending rose at a record year-on-year pace before Japan's October tax hike

Kyodo

Japan’s household spending increased at the fastest pace on record in September, boosted by last-minute buying ahead of a consumption tax hike starting Oct. 1, government data showed Friday.

Spending by households with two or more people rose 9.5 percent in real terms to ¥300,609 ($2,750) from a year earlier, the highest since comparable data became available in January 2001, according to the Ministry of Internal Affairs and Communications.

The result contradicts Cabinet ministers’ view that there was no major last-minute spike in demand ahead of the tax hike from 8 to 10 percent, as previously happened ahead of the tax increase from 5 to 8 percent in April 2014.

A wide variety of goods ranging from daily necessities to pricey electrical appliances sold well in September, with purchases of refrigerators increasing 3.4-fold and bicycles by 2.8-fold.

The biggest contributor to the record increase was transportation and telecommunication expenditures, including commuter passes and mobile phones, which surged 15.4 percent from a year earlier, a ministry official said.

Expenditures on household appliances jumped 60.3 percent, while spending on leisure activities, including accommodations, grew 10.8 percent.

The ministry official also attributed the sharp year-on-year increase to weak spending the previous September due to the impact of typhoons and other natural disasters.

Household spending is a key indicator of private consumption, which accounts for more than half of gross domestic product in the world’s third-largest economy.

After adjusting for inflation, the average monthly income of salaried households with at least two people was down 0.4 percent from a year earlier to ¥457,427.

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