Japan¡¯s households unexpectedly cut spending for the first time in six months, in a sign of the fragility of domestic demand as the Bank of Japan prepares to consider raising borrowing costs later this month.
Outlays by households adjusted for inflation fell 3% in October from a year earlier, led by spending declines in transport and housing, the Ministry of Internal Affairs and Communications reported Friday. Economists had expected a 1% gain.
Private spending is a key component in the BOJ¡¯s goal of achieving a virtuous economic cycle in which wage gains help fuel demand-led price increases. Domestic consumption has expanded for three straight quarters, albeit at a subdued pace.
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