TOKYO (MNI) – Japan’s average household spending fell 0.4% in
October from a year earlier to Y287,433, posting the first y/y drop in
five months after being unchanged in September, as positive effects of
last-minute spending on cars and cigarettes faded, data from the
Ministry of Internal Affairs and Communications showed Tuesday.

The October figure came in slightly higher than the median forecast
for -0.5% in an MNI survey of economists. In nominal terms, spending
fell 0.1% y/y.

Household spending rose a real 1.7% in August, 1.1% in July and
0.5% in June but fell 0.7% in both May and April, and was up 4.4% in
March (when there were rush purchases of consumer electronics), the
latter being the largest y/y gain since +5.0% in May 2004.

The May 2009 rise (+0.3%) was the first y/y gain in real terms in
16 months.

Real spending rose in five out of the 10 categories in October:
furniture and household utensils including refrigerators and air
conditioners (+12.2%), culture and recreation (+11.2%), education
(+10.9%), clothing and footwear (+5.1%) and utility charges (+4.1%).

These gains were more than offset by lower spending on home
maintenance and repairs (-7.8%), medical care (-7.3%), transportation
and communication led by automobiles (-5.9%), food (-2.0%) and other
consumption expenditures on tobacco, etc. (-0.8%).

The government ended its subsidy program for buying
energy-efficient vehicles in early September but will continue to waive
taxes or apply lower tax rates for buying and owning low-emission cars
and trucks.

Spending on automobiles and gasoline fell to 5.9% in October,
worsening from -1.7% in September and +8.6% in August, when some
consumers rushed to car dealerships before the end of the subsidy
program.

The government raised the tobacco tax on Oct. 1, causing
last-minute buying of cigarettes in September.

Meanwhile, the government’s reward program for buying greener
consumer electronics has continued to support demand for certain models
of flat-screen TVs, refrigerators and air conditioners/heaters.

The average real income of salaried workers’ households rose 7.2%
from a year earlier in October to Y494,398, posting the third
consecutive y/y rise following the 1.5% rise in September. It rose a
nominal 7.5% in October.

Real disposable income in the average salaried workers’ household
rose 8.1% from a year before in October to Y419,532, also marking the
third consecutive y/y gain. It rose 8.4% in nominal terms.

tokyo@marketnews.com
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