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Japan household spending up in August ahead of sales tax hike as wages drop

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Japan household spending up in August ahead of sales tax hike as wages drop

Japan's household expenditure rose at a slower rate than expected in August, while real wages declined again before the implementation of the government's consumption tax hike.

Household spending rose 1.0% year over year in real terms and after discontinuity adjustments, following a 0.8% increase in July, according to the Ministry of Internal Affairs and Communications' Statistics Bureau. The consensus estimate of economists polled by Econoday was for an annual increase of 1.2%.

In nominal terms, household spending rose 1.3%.

Spending on furniture and household utensils climbed 13.2% in real terms to ¥13,447, while fuel, light and water charges expenditure fell 9.7% to ¥17,990.

Food spending increased 1.6% to ¥85,996 and housing spending dropped 1.8% to ¥16,260.

Separately, real wages fell 0.6% year over year in August following a revised 1.7% decline in the prior month, the Ministry of Health, Labor and Welfare said.

Total cash earnings ticked down 0.2%, following a revised 1.0% decline a month ago.

"[T]hese figures are still dreadful, and with business investment and exports in Japan hampered by the ongoing tech slump and trade war uncertainty, if the outlook for consumer spending is not supported by earnings, then overall GDP growth has little underpinning," wrote Robert Carnell, chief economist head of research for Asia-Pacific at ING.

As of Oct. 7, US$1 was equivalent to ¥106.98.