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TOKYO (Reuters) – Japanese household spending rose less than expected in July, government data showed on Friday, as consumers remained wary of loosening their purse strings in the face of higher prices.<\/p>\n
Consumer spending edged up 0.1% in July year-on-year, compared with the median market forecast for 1.2% growth. On a seasonally adjusted, month-on-month basis, spending decreased 1.7% versus an estimated 0.2% drop.<\/p>\n
Data a day earlier showed Japan’s inflation-adjusted wages grew for the second straight month in July, primarily thanks to a bump in summertime bonuses. Base pay, or regular pay, marked the fastest pace of increase in nearly 32 years, reflecting results from this spring’s labour-management wage talks.<\/p>\n
But a government official said the big test would be whether real wages continue rising in August and beyond, without the seasonal factor of summer bonuses.<\/p>\n
Along with solid wages and durable inflation, robust consumption is among the factors the Bank of Japan says are key to its decision to raise interest rates further.<\/p>\n
The BOJ ditched negative interest rates in March and raised short-term rates to 0.25% in July on the view the economy was making progress toward durably achieving its 2% inflation target.<\/p>\n
The Japanese government last month upgraded its economic assessment for the first time in more than a year on signs of improving personal spending, which accounts for more than half of Japan’s economy.<\/p>\n
(Reporting by Satoshi Sugiyama; Editing by Himani Sarkar and Lincoln Feast.)<\/p>\n<\/div>\n