Japan data – May household spending +4.7% y/y (expected +1.2%, prior -0.1%) | Forexlive

Japan data – May household spending comes in at a huge beat, +4.7% y/y, the fastest pace since August 2022

• expected +1.2%, prior -0.1%

+4.6% m/m, fastest since March 2021

• expected +0.4%, prior -1.8%

These are big beats, both m/m and y/y and will reignite speculation of nearer-term Bank of Japan rate hikes. Markets had settled on the next round of hikes coming in 2026.

Key factors the Bank of Japan are watching include:

• consumption trends
• wage trends

Japanese workers have received hefty nominal wage rises, Japanese companies agreed to raise wages by 5.25% this year. But inflation-induced sharp increases in the cost of living are weighing on real wage growth.

The Bank of Japan is also wary of global trade tensions resulting from Trump’s tariff war.

Japanese household spending data comes via the internal affairs ministry.

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