Friday, July 5, 2019 - 01:34

MNI DATA IMPAT: BOJ May Consumption Index Drops; Seen Solid

TOKYO (MNI) - The Bank of Japan's supply-side Consumption Activity Index posted the first drop in two months, down a real 0.4% on a seasonally adjusted basis, following +1.7% (revised from +1.4%) in April, data released Friday showed.

The BOJ's Consumption Activity Index is designed to forecast revised private consumption, not a preliminary estimate.

The index for the April-May period rose 0.8% on quarter, accelerating from 0% in the first quarter.

BOJ officials think the developments in the index are consistent with the latest assessment that "private consumption has been increasing moderately, albeit with fluctuations, against the background of steady improvement in the employment and income situation."

However, they also judge that private consumption, which accounts for about 60% of the total domestic output, is still lacking momentum as income is only rising slowly.

Many eating/drinking firms are gradually raising their retail prices on the back of the high labor and input costs on the assumption that price hikes will be accepted by consumers.

Private consumption isn't weak, but neither has it gained momentum. Higher income will have a positive impact on household spending but it remains uncertain how higher income will actually increase consumer spending, the BOJ views.

BOJ economists are focused on how private consumption accelerates in the coming months due to the last minute surge in demand ahead of the sales tax hike planned in October and how the underlying trending of consumption evolves after the tax hike.

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email:
--MNI London Bureau; tel: +44 203-586-2225; email:


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