• Kyodo

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Japan’s household spending fell a real 5.1% in June from a year earlier, as the previous year’s consumption was largely supported by a cash handout program and economic resumption after the initial shock of the coronavirus pandemic, government data showed Friday.

Average spending by households with two or more people in real terms was ¥260,285 ($2,370), marking the first decline in four months, according to the Ministry of Internal Affairs and Communications.

With the aim of easing the economic fallout from the pandemic, the government started the across-the-board ¥100,000 per person cash handouts in May last year, boosting purchases of home appliances and other items the following month, a ministry official told reporters.

In 2020, household spending plunged 11.1% from a year ago in April and 16.2% in May, largely affected by the country’s first virus emergency from early April through late May, but the margin of the drop was significantly reduced to 1.2% in June as social and economic activities gradually resumed.

Under the first virus emergency, people were asked to stay home and non-essential businesses to suspend operations, dealing a heavy blow to the economy.

In the reporting month, seasonally adjusted spending dropped 3.2% from the previous month, down for the second straight month, as the government’s third virus emergency continued for Tokyo and some other areas through late June. It followed a 2.1% decline in May.

The average monthly income of salaried households with at least two people fell a record 11.5% in real terms to ¥904,078 in June, down for the second month in a row, mainly due to last year’s ¥100,000 cash handouts.

Household spending is a key indicator of private consumption, which accounts for more than half of Japan’s gross domestic product.

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