Japanese households had accumulated a record ¥2.023 quadrillion in financial assets as of December last year, roughly four times the size of its economy, as the COVID-19 pandemic kept consumers housebound, saving their money instead of spending it.
While the crisis in Ukraine clouds the outlook by pushing up fuel and living costs for households, the government's decision to end pandemic curbs next week could give consumption a much-needed boost.
"Households may see their purchasing power sapped as prices of goods like flour and gasoline rise," said Masato Koike, senior economist at Dai-ichi Life Research Institute. "But consumption is likely to recover as Japan pulls out from the pandemic."
The financial assets households accumulated at the end of December was 4.5% higher than year-before levels, and topped the ¥2 quadrillion mark for the first time, central bank data showed on Thursday.
Cash and deposits accounted for over half of the total assets, up 3.3% to ¥1.092 trillion, the largest on record, reflecting consumers saving more than spending. Comparable data became available in 2005.
Higher stock prices boosted the value of assets held in equities by 15.5% to ¥212 trillion and those in investment trusts by 20.4% to ¥94 trillion.
Assets held by nonfinancial firms hit a record ¥1,279 trillion, up 5.9%, the BOJ data showed. Corporate earnings have been recovering from the initial pandemic fallout.
Corporate lending by financial firms was up 0.2% at ¥356 trillion, a sign of easing funding needs.
The BOJ's current policy has kept borrowing costs low, providing funding support in particular for companies hit by the pandemic. As part of its monetary easing, the central bank continues to buy assets including Japanese government bonds and exchange-traded funds.
The BOJ's holdings of Japanese government bonds fell 2.9% to ¥530 trillion. But it still owned 43.4% of the outstanding state debt.
Overseas investors held ¥175 trillion worth of the bonds, up 7.4%.