Japan’s households boosted spending in October for a second straight month despite accelerating inflation and falling real wages, marking a better-than-expected start to the final quarter of the year.
Outlays rose 1.1% from September, led by gains in clothing and entertainment, the internal affairs ministry reported Tuesday. Spending climbed 1.2% from a year ago, more than the increase forecast by analysts.
The solid spending data suggests the release of pent-up demand is supporting the country’s recovery path for now, even as inflation eats into households’ purchasing power. Economists forecast that Japan’s economy will return to growth again this quarter, pushed up by private sector investment and consumption. In the three months ended September, the economy unexpectedly shrank as the yen’s historic slide battered firms and households.