Household spending fell for a second straight month in November and by more than forecast, according to data released Friday by the Ministry of Internal Affairs and Communications, suggesting that a higher sales tax may weigh on private consumption for some time.
The world's third-largest economy is struggling to regain momentum after households tightened their belts following the sales tax hike in October and as slower global demand hit exports.
Weak consumption will add to the risk that economic growth could stall in the final quarter of 2019, or even contract.
Household spending fell 2.0 percent in November from a year earlier, the government data showed, worse than a median forecast for a 1.7 percent decline.
"The pace of a pick-up in household spending in November after a huge drop in October is weak," said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute. "It is unclear if the spending will recover steadily in coming months given the tax burden and tepid wage recovery," he added.
Other data released Friday was also downbeat.
The index of coincident economic indicators, which consists of a range of data including factory output, employment and retail sales data, slipped a preliminary 0.2 point to 95.1 in November from the previous month, for the lowest reading since February 2013, the Cabinet Office said.