Japan's household spending drops 6 pct in March amid virus spread

Source: Xinhua | 2020-05-09

Spending by households in Japan dropped 6.0 percent in March from a year earlier, marking the largest drop in five years amid government requested restrictions including for the public to stay at home to prevent the spread of the COVID-19, official data showed Friday.

According to the Ministry of Internal Affairs and Communications, spending in real terms by households with two or more people in the recording period was 292,214 yen (2,750 U.S. dollars).

The amount dropped for the sixth straight month since the consumption tax in Japan was raised in October last year from 8 to 10 percent, the ministry's figures showed.

A ministry official told a press briefing that the spread of the virus had prompted households to curtail what they deemed unnecessary spending, such as eating out, traveling and buying clothes, amid concerns and uncertainty over the further spread of the virus and possible stricter restrictions being placed on businesses and the public.

Spending on culture and recreation decreased 20.6 percent, the statistics bureau said, while outlays on domestic and overseas package tours plunged 83.2 percent from a year earlier.

Outlays on food retreated 2.4 percent in the recording period and money spent on eating out fell more than 32 percent, the ministry also said.

Looking ahead, the ministry official said the likelihood would be that for April the downward trend in spending would continue owing to the state of emergency declared by Japanese Prime Minister Shinzo Abe over the virus pandemic.

The emergency declaration was first issued on April 7 for seven prefectures in Japan including Tokyo, before it was expanded to cover all of the country's 47 prefectures. It was later extended to the end of May.

"We shouldn't assume that the figure touched rock bottom in March," the official said, with his remarks underscored by Economic Revitalization Minister Yasutoshi Nishimura.

"I think the sharp drop is the result of the request for people to stay home. I expect the figure in April will be even more severe due to the state of emergency," said Nishimura.

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