TOKYO, Nov. 8 (Seal News) — Household spending in Japan increased at the fastest pace on record in September from a year earlier, as a consumption tax hike from eight to 10 percent starting Oct. 1 spurred last-minute buying, the government said in a report on Friday.
According to the Ministry of Internal Affairs and Communications, household spending jumped 9.5 percent in the recording month to 300,609 yen (2,750 U.S. dollars), marking the 10th successive month of increase and the highest year-on-year rise in real terms since comparable data became available.
Economists here said that demand ahead of the latest tax hike, as compared to the previous consumption tax hike from five to eight percent in April 2014, saw consumers dash to purchase goods in the month ahead of the hike.
This was in contrast to Cabinet ministers saying previously that there was no major last-minute spike in demand.
Prior to the 2014 tax hike, demand started to rise notably six months in advance. This time around, however, hasty buying in the last month before the tax hike was stronger than expected, economists here explained.
Spending on household durable goods, including but not limited to refrigerators and air conditioners, saw a significant uptick in the recording month, the ministry said, although added that it was spending on transportation and telecommunication-linked items like travel passes and mobile phones that contributed the most to the record increase.
Household spending is a key indicator of private consumption and accounts for more than half of Japan’s gross domestic product.