It seems like Japanese retailers are saying not to believe in official statistics on consumer spending as stores cut earnings forecasts and expects a lackluster consumer spending, which is an important factor in the growth of Japan during a time of declining exports and factory output.
Reuters reported early in October that the household spending that exceeds 2.9 percent in August suggests that the consumption seems to be alive and well again. This is considered to be the first year-on-year increase, exceeding that level for the first time in three months. This is very significant, especially after the sales tax hike in 2014 that adversely affected the economy. However, the retailers' profits show that the spending data has not reached the full picture, especially since it is just a small sample size. The restrained household spending prompted a central bank policy meeting at the end of the month. This leads the government to come up with new economic policies before the end of 2015.
In a report by the Nikkei Asian Review on October 23, almost 25 percent of Japanese consumers spending has surpassed the 2 percent inflation rate targeted by the Bank of Japan. This means the public is affected by the higher prices under an ever sluggish economic growth. The significant decrease in oil prices has prevented the looming inflation in Japan. Consumer price index went down 0.1 percent in August this year. It went down to negative territory, which is the first time it dropped that low in 28 months.
With all these issues, there are speculations that the Bank of Japan will surprise markets with more credit easing, as it did in 2014. Despite this, BOJ will still hold a policy meeting by Friday, according to Asia One Business.
The central bank is expected to lessen its growth and inflation projections in a biannual economic and price outlook report, which will be included in the upcoming meeting.
Join the Conversation