• Kyodo

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Household spending tumbled a real 10.2% in September from a year earlier, due mainly to a last-minute surge in demand the previous year ahead of a consumption tax hike, government data showed Friday.

The monthly drop was the sharpest since the 16.2% plunge logged in May, the largest decrease since comparable data became available in January 2001. The fall was attributed to a nationwide state of emergency, then in effect over the coronavirus pandemic, according to the Internal Affairs and Communications Ministry.

In the September, spending by households with two or more people in real terms fell for the 12th straight month to ¥269,863 ($2,600). There was a 9.5% year-on-year increase in September 2019, the fastest pace on record, ahead of a consumption tax hike from 8% to 10% on Oct. 1 that year.

The seasonally adjusted figure for spending, meanwhile, climbed 3.8% from August, up for the second consecutive month following a 1.7% rise in the previous month, as economic activities have resumed gradually after the government's early April emergency declaration that was completely lifted in late May.

Household spending is a key gauge of private consumption and accounts for over half of Japan's gross domestic product, which contracted an annualized real 28.1% in the April-June quarter due to the government's emergency declaration and stay-at-home requests.

"Due to a demand surge ahead of the last year's tax hike, consumption significantly dropped in the reporting month for durable goods such as television sets, personal computers and refrigerators, but spending on those items was better than two years ago," a ministry official told reporters.

"The negative effects caused by the virus seem to have been weakening, apparently because the virus spread has settled down to a relatively low level," the official added.

The country had seen a resurgence of virus infections with more than 1,500 daily new cases nationwide from late July to early August, but the pace slowed to below 1,000 per day in September.

By category, outlays for domestic and overseas package tours plummeted 61.4% from a year ago, but the decrease was smaller than the previous month's 87.3% dive.

Expenditures on airfares and accommodation showed a similar trend, as they dropped 68.2% and 25.7% in the reporting month, respectively, compared to 95.9% and 47.1% falls in August.

The ministry official said the government's Go To Travel subsidy campaign launched in late July to boost the virus-hit domestic tourism sector is believed to have contributed to the improvement.

Only utility costs saw a year-on-year rise, up 4.0%, with the official pointing to higher electricity bills charged in September for August, when heatwaves gripped much of the country.

The average monthly income of salaried households with at least two people rose a real 2.6% to ¥469,235.

Income rose for the ninth month in a row, helped in part by the government's ¥100,000 cash handout for all households decided upon in April to cushion the economic fallout from the pandemic.

PHOTO GALLERY (CLICK TO ENLARGE)

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