Japan FY 2024 household spending down for 2nd year amid rising prices

Japan’s household spending in fiscal 2024 dropped a real 0.1 per cent from a year earlier, falling for the second consecutive year, as consumers reduced food expenditure amid rising prices, government data showed recently.

Households of two or more people spent an average of 304,178 yen ($2,100) per month in the fiscal year ended March, according to the data, a key indicator of private consumption that accounts for more than half of Japan’s gross domestic product.

The drop came as real wages in March fell 2.1 per cent from a year earlier for the third consecutive monthly decline, separate data showed, with income growth falling behind price hikes as a weak yen pushes up import costs and companies pass labour and other expenses on to consumers.

Some 39 per cent of people in Japan feel lonely at times, according to a recent government survey, with legislation that took effect in April last year to address isolation apparently not yet having a significant impact.

The percentage of people who either felt lonely “often or always,” “sometimes” or “once in a while” totalled 39.3 per cent in 2024, unchanged from the previous survey in 2023. The figure has remained largely unchanged since the study began in 2021.

The survey for the first time also examined the relationship between feelings of loneliness and smartphone usage. Among those who used smartphones for more than eight hours a day, 13.3 per cent said they felt lonely “often or always.”

The figure stood at 9.5 per cent among those who used their devices between seven and eight hours, higher than among those who reported using their phones less.

Meanwhile Japan’s Nikkei share average ended higher on Monday as indications of progress in US-China trade talks boosted hopes of a deal between the major economies.

The Nikkei closed 0.38 per cent higher at 37,644.26, after trading in the negative territory during the session.

The broader Topix rose 0.31 per cent to finish at 2,742.08, marking a 12-day winning streak, its longest since October 2017.

The Sino-US trade talks ended on a positive note on Sunday, with US officials touting a “deal” to reduce the US trade deficit, while Chinese officials said an “important consensus” was reached and agreed to launch another new economic dialogue forum.

“Investors bought stocks on optimism that the trade talks between the US and China made progress,” said Shuutarou Yasuda, a market analyst at Tokai Tokyo Intelligence Laboratory.

“But gains were limited as they sold stocks on the rally. Both the Nikkei and Topix rose sharply, but those rallies were based just on expectations on the trade talk progress.”

The Nikkei has risen about 20 per cent from its close on April 7, when it fell to a 1-1/2-year low after the announcement of sweeping US tariffs.

The rally took the index to 7.75 per cent above its 25-day average on Friday, an indication that the market was overheated, said Maki Sawada, senior strategist at Nomura Securities.

On the day, chip-testing equipment maker Advantest jumped 9 per cent to provide the biggest boost to the Nikkei and was the top percentage gainer on the index.

The pharmaceutical sector fell 6.48 per cent, the most among the exchange’s 33 industry sub-indexes, after US President Donald Trump said he would sign an executive order to reduce prescription drug and pharmaceutical prices.

Chugai Pharmaceutical, majority owned by Roche Holdings, sank 11 per cent, the most since March 2011. Takeda Pharmaceutical, which gets more than 50% of its revenue from the US, slid 5.5 per cent.

The Japanese government bond yields rose on Monday, as signs of progress in US-China trade negotiations bolstered investors’ risk appetite, prompting a sell-off in safe-haven assets.

The 10-year JGB yield touched 1.4 per cent, its highest since April 10, and was last at 1.38 per cent, up 3 basis points (bps) from the previous session.

“Investors’ risk appetite was lifted after they saw signs of progress in the talks between the United States and China,” said Katsutoshi Inadome, a senior strategist at Sumitomo Mitsui Trust Asset Management.

“The market still has not seen development of talks between Japan and the US, but the fate of the talks between China and the United States is important.”

Over the weekend, US Treasury Secretary Scott Bessent touted “substantial progress” in trade discussions, while Chinese officials said the sides had reached “important consensus” and agreed to launch another new economic dialogue forum.

Geopolitical tensions also looked to be easing as a fragile ceasefire held between India and Pakistan, while Ukrainian President Volodymyr Zelenskiy said he was ready to meet Vladimir Putin in Turkey on Thursday for talks.

The five-year yield rose 3 bps to 0.91 per cent, while the two-year JGBs were not traded, as of 0542 GMT.