• Kyodo

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Household spending rose a real 1.1% in November from a year earlier, with a rebound from the previous year's drop due to a tax hike outweighing a decrease amid a resurgence of coronavirus infections, government data showed Friday.

Average spending by households with two or more people in real terms was ¥278,718, up for the second straight month, according to the Internal Affairs and Communications Ministry. It increased 1.9% in October.

The figure had fallen for 12 straight months through September mainly due to a consumption tax hike from 8% to 10% implemented on Oct. 1, 2019, as well as the impact of the pandemic since last spring.

Meanwhile, seasonally adjusted spending in November fell 1.8% from the previous month for the first decline in four months. The month saw the start of a third wave of virus infections with daily numbers of cases continuing to rewrite record levels.

"Consumption of some items increased in reaction to (falls in the previous year triggered by the tax hike), but at the same time, declines in spending on components such as eating out widened as virus infections spread," a ministry official told reporters.

The virus resurgence has gathered strength, forcing Prime Minister Yoshihide Suga to declare another state of emergency in the Tokyo metropolitan area on Thursday.

Effective through Feb. 7, the emergency entails requests for residents to stay home, and for service providers such as restaurants, bars, department stores and entertainment facilities to shorten their operating hours.

"It is inevitable that some negative effects will occur," the official said.

By category, the official said at-home consumption grew in November, as utility costs and outlays for furniture and household utensils soared 10.6% and 10.8%, respectively. Expenditures on foodstuffs such as meat and vegetables for cooking at home were also up 1.7%.

Spending on alcohol dived 57.4%, a sharper decline than the 36.3% drop in October.

Outlays for domestic and overseas package tours plunged 55.1%, compared to the previous month's 27.0% fall, despite the state-subsidized Go To Travel campaign launched last July to boost the virus-hit domestic tourism sector.

The average monthly income of salaried households with at least two people rose a real 0.6% to ¥473,294, up for the 11th month in a row.

Japan's first virus emergency was declared in Tokyo and six prefectures in early April last year and was expanded nationwide later that month. The measure dealt a major blow to the world's third-largest economy until it was completely lifted in late May.

Spending sank 16.2% in May last year, the sharpest decline since comparable data became available in January 2001, and 11.1% in April 2020.

Household spending is a key gauge of private consumption and accounts for over half of Japan's gross domestic product.

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