Japan’s Household Spending Massively Beats Expectations, Boosting Case for Further Boj Hikes

Japan’s Household Spending in December Rose 2.7% Year on Year in Real Terms, Massively Beating Expectations from Economists Pollled By Reuters and Marking Its FIRST RES FIRST RES SISE SINCE SINCE JULY 2024.

The Figure sharply Beat Reuters Expectations of a 0.2% Rise, Boosting the case for another interest rate hike from the bank of Japan.

According to a Friday Report from the statistics bureau of japanAverage Household Expendriture in Japan Stood at 352,633 yen ($ 2,332) in December, up 7% in nominal terms from from the previous year.

The average monthly income per household was 1,179,259 yen, up 7.2% in nominal terms and up 2.9% in real terms year on year.

The data come after the Boj raised its benchmark policy rate to 0.5%Its Highest Since 2008. The boj has long stated it would raise rates if it sees a “virtuous cycle” of higher prices and growing wages.

On Chiursday, Boj Board Member Naoki Tamura said that it was “Necessary” for the Boj to Raise Short-Term Interest Rates to “At Least Around 1%”By the Second Half of Fiscal Year 2025Japan’s 2025 Fiscal Year Ends on March 31, 2026.

Japan’s Upcoming Spring Wage Discussions, also know as the “shunto” negotiation, will be in focus for investors watching the boj’s interest rate moves. The negotiations will start some time in February, and larger companies Will Respond Around Mid-March,

The head of the Japanese Trade Union Confederation, or Rango, Said in January that Annual Pay Increases for Japanese Workers in 2025 Must Be Higher Than the 5.1% Growth Last Year BeCause Contina to Fall, Reuters Reported,

Data from the country’s Labor Ministry Revealed that real wages have fallen for the past three years, with real wages dropping 0.2% year on year in 2024.

Rengo President Tomoko Yoshino Reportedly Said The Labor Organization is formally seeking wage incurses of at least 5% in this year “Wage” Wage Negotiations.

To ensure incomes of workers at smaller firms do not fall behind these in bigger ons, yoshino said there should be a hike of at least 6% for the former.

– CNBC’s Lee Ying Shan Contributed to this Report.

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