A customer picks up a snack at a supermarket store in Tokyo, Japan, on Tuesday, July 27, 2021.
Noriko Hayashi | Bloomberg | Getty Images
Japan’s household spending in December rose 2.7% year on year in real terms, massively beating expectations from economists polled by Reuters and marking its first rise since July 2024.
The figure sharply beat Reuters expectations of a 0.2% rise, boosting the case for another interest rate hike from the Bank of Japan.
According to a Friday report from the Statistics Bureau of Japan, average household expenditure in Japan stood at 352,633 yen ($2,332) in December, up 7% in nominal terms from the previous year.
The average monthly income per household was 1,179,259 yen, up 7.2% in nominal terms and up 2.9% in real terms year on year.
The data comes after the BOJ raised its benchmark policy rate to 0.5%, its highest since 2008. The BOJ has long stated that it would raise rates if it sees a “virtuous cycle” of higher prices and growing wages.
On Thursday, BOJ board member Naoki Tamura said that it was “necessary” for the BOJ to raise short-term interest rates to “at least around 1%” by the second half of fiscal year 2025. Japan’s 2025 fiscal year ends on March 31, 2026.
Japan’s upcoming spring wage discussions, also known as the “shunto” negotiations, will be in focus for investors watching the BOJ’s interest rate moves. The negotiations will start some time in February, and larger companies will respond around mid-March.
The head of the Japanese Trade Union Confederation, or Rengo, said in January that annual pay increases for Japanese workers in 2025 must be higher than the 5.1% growth last year because real wages continue to fall, Reuters reported.
Data from the country’s labor ministry revealed that real wages have fallen for the past three years, with real wages dropping 0.2% year on year in 2024.
Rengo President Tomoko Yoshino reportedly said the labor organization is formally seeking wage increases of at least 5% in this year’s “shunto” wage negotiations.
To ensure incomes of workers at smaller firms do not fall behind those in bigger ones, Yoshino said there should be a hike of at least 6% for the former.
— CNBC’s Lee Ying Shan contributed to this report.
This is breaking news, please check back for updates.