Japan's household spending falls 1.8% in May on higher prices

Japan's household spending in May dropped a real 1.8 percent from a year earlier, the first decline in two months, as rising prices prompted people to cut back on food outlays and a weak yen discouraged travel abroad, government data showed Friday, Kyodo reports. 

Average spending by households with two or more people stood at 290,328 yen ($1,800), the Ministry of Internal Affairs and Communications said. The drop followed a 0.5 percent rise in April, which was the first increase in 14 months.

The average monthly income of salaried households with at least two people rose 3.0 percent in real terms to 500,231 yen in the reporting month, marking the first increase in 20 months.

Citing a 1.1 percent drop in salaried households' spending to 318,560 yen in May, a ministry official said, "It is still uncertain whether wages have kept pace with rising prices."

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

By category, expenditures on food, which account for around 30 percent of spending, fell 3.1 percent, as people spent less on vegetables and cooked food amid rising prices.

Culture and recreation expenditures fell 8.4 percent, led by lower spending on overseas tour packages affected by the yen's persistent depreciation against other major currencies.

Spending on energy and water bills as well as furniture and household products dropped by 9.7 percent and 10.0 percent, respectively, reflecting the return of more workers to offices after the coronavirus pandemic compared with the previous year.

But spending on education climbed 9.3 percent, as tuition fees at private universities increased following the expiration of exemption or waiver measures implemented during the pandemic.