TOKYO (Reuters) -Japanese household spending unexpectedly fell in April, as consumers tightened their purse strings in the face of higher prices.
Consumer spending fell 0.1% in April from a year earlier, data from the internal affairs ministry showed on Friday. That was worse than the median market forecast for 1.4% growth and March’s 2.1% increase.
On a seasonally adjusted, month-on-month basis, spending declined 1.8%, versus an estimated 0.8% fall.
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.
Hefty pay hikes are seen as essential to counter sharp increases in the cost of living. Major Japanese firms on average agreed to more than 5% pay hikes during annual spring wage talks in March.
The monthly wage data released on Thursday showed real wages fell for a fourth consecutive month, eroded by stubborn inflation that has continued to outpace pay hikes.
Looking ahead, Japanese policymakers and analysts are concerned global trade tensions triggered by U.S. tariffs may weaken wage momentum and complicate the BOJ’s efforts to normalise monetary policy.
(Reporting by Satoshi SugiyamaEditing by Chang-Ran Kim and Sam Holmes)
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