By Kantaro Komiya

TOKYO, Reuters – Japan’s August household spending dropped 3.0% from a year ago, according to government data. This was due to the fact that the state of emergency measures taken against the coronavirus pandemic impacted consumption in the summer holidays season.

This data is not good news for Fumio Kishhida, new Prime Minister. He wants to revitalize the economy and give more wealth to families through better wages.

This was worse than the median market prediction for a 1.5% decline and came after a July 0.7% rise.

Monthly figures for August showed 3.9% decrease in volume, compared to expectations of a 2.2% drop.

Officials from the government stated that COVID-19 spread and subsequent national restrictions prevented consumers from eating at restaurants and buying a variety of goods. They also said that customers were discouraged from visiting stores when it rains.

The third-largest economy in the world has seen a decline in consumption. This is due to a rise of Delta variants and emergency curbs that prevented households from going out or shopping. According to a private survey, Japan’s service sector activity declined for the 20th consecutive month in September.

Analysts expect that consumption will rebound as a result of the removal of restrictions from October and continued progress in vaccines.

However, the economy is facing new headwinds due to supply limitations. A shortage of parts and semiconductor chips disrupts automotive production enough that it can hurt exports.

Separate data from Friday revealed that inflation-adjusted wages rose 0.2% in August compared to the previous year, mostly due to a statistical basis effect.