Japan’s Household Spending Drops Again Amid Rising Costs

Tokyo – Japan’s household spending declined for the second consecutive year in fiscal year 2024, mainly due to rising prices and falling real wages.

Government data showed that households with two or more people spent an average of 304,178 yen (around $2,100) per month in the fiscal year ending March. This marks a 0.1% drop in real terms compared to the previous year. Household spending is a key indicator of private consumption, which contributes more than half of Japan’s gross domestic product (GDP).

The decrease is largely attributed to reduced spending on food, as consumers faced higher prices. At the same time, real wages fell 2.1% in March from a year earlier, marking the third straight monthly decline. This reflects how income growth continues to lag behind inflation.

A weak yen has contributed to the issue by raising import costs. Many businesses have responded by passing on increased labor and production expenses to consumers, further squeezing household budgets.

The data highlights ongoing challenges for Japan’s economy as it struggles to boost domestic demand and achieve stable wage growth amid inflationary pressures.