By Daniel Leussink

TOKYO, Reuters – Japan’s consumer spending fell for the fourth consecutive month in November. This was a disappointing reading and cast doubt on the possibility of a recovery in consumer demand that will provide a significant boost to the economy during the last quarter 2021.

The government data revealed that household spending decreased by 1.3% in November compared to a year before. This is far less than what the market expected, which was 1.6%, according to a Reuters poll.

Monthly figures for June were also down 1.2%. They fell below the 1.2% growth forecast. The reason was that households continued to be hesitant about spending more despite lower COVID-19 levels than in summer.

These weak numbers raise concerns about policymakers who hope that a rebound of consumer demand will support economic growth as businesses struggle to cope with increased import cost because of a rise in raw material prices which have fueled global inflation.

Separate data from Friday revealed that core consumer prices rose in Tokyo at the fastest rate in almost two years in December. This was due to an increase in global energy prices and higher prices for gasoline. Prices of overnight stay also increased.

According to government data, Japan’s core consumer price index (CPI), which excludes fresh foods prices but includes oil products, increased 0.5% in December. This was the largest year-on-year increase since February 2020.

The inflation-adjusted real wage index fell 1.6% in November and is indicating that the economy will be weaker.

Japan’s economy should have experienced a sharp increase in October and December 2021, after declining coronavirus incidences. But rising costs of goods and recent Omicron outbreaks are creating doubts.