Japan household spending falls at fastest pace in 30 months

Japanese household spending fell in July at its fastest annual pace in 30 months, dropping 3.6 per cent year-on-year. This decline marks the eighth consecutive month of contraction and exceeded median forecasts. While seasonally adjusted month-on-month spending rose slightly by 0.5 per cent, it fell short of expected growth. Consumers are reportedly cutting back on food and transportation while remaining selective with outlays.

In response to economic pressures, the Japanese government has presented a draft tax reform outline to the Liberal Democratic Party. The proposal includes a 1 per cent consumption tax reduction on food items. To mitigate the impact on the agricultural, forestry, and fishery sectors, the plan specifies a mechanism to provide subsidies based on individual sales figures. The ruling party aims to finalize the outline by mid-month.