TOKYO (Reuters) -Japanese household spending fell for the first time in three months in February, government data showed on Friday, highlighting consumer wariness in the face of high prices, but the decline was less than economists had feared.
Lacklustre personal consumption is a source of concern for policymakers preoccupied by the fallout from U.S. President Donald Trump’s new tariffs announced on Thursday – even as many companies are planning their biggest wage hikes in 34 years.
Consumer spending fell 0.5% in February from a year earlier, internal affairs ministry data showed, better than the median market forecast for a 1.7% drop but down from January’s 0.8% increase.
On a seasonally adjusted, month-on-month basis, spending climbed 3.5%, versus an estimated 0.5% rise.
Consumption and wage trends are among key factors the Bank of Japan is watching to gauge economic strength and decide how soon to raise interest rates.
Japanese companies have agreed to raise pay by 5.42% this year, the third tally of annual labour talk results from the country’s largest union umbrella group Rengo showed on Thursday.
Hefty pay hikes have been seen as essential to counter sharp increases in the cost of living. Many companies, emboldened by record profits on the back of a weak yen, are also keen to retain staff amid labour shortages.
(Reporting by Satoshi Sugiyama; Editing by Chang-Ran Kim and Sonali Paul)
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