Japan’s consumption recovery depends on high-income households
The consumption recovery in Japan has been noticeably slower than in other advanced economies. The recent pick up in the pace of the recovery was mainly brought about by an increase in discretionary spending among high-income households, supported by accumulated savings and wealth effects.
What you will learn:
- Households in the low- and middle-income bracket have barely managed to maintain essential consumption in an environment of rising prices of necessities and stagnant wages.
- The fall in discretionary spending among the middle class is particularly significant because their real income has fallen quickly, with little support from savings and assets.
- Although our analysis suggests that there is still unfulfilled pent-up demand for discretionary spending among the rich, it will gradually lose momentum by mid-2023. We don’t expect consumption to regain its 2019 level until 2024.
The BoJ looks to buy time as pressures mount
The Bank of Japan maintained its monetary policy settings at today’s (18th Jan) meeting. At the same time, the BoJ decided to enhance the funds-supplying operations to put downward pressure in the belly zone of JGB yield. Meanwhile, revisions in inflation outlook were smaller than we had expected. We think that the BoJ will continue to stick to its current Yield Curve Control policy ahead.Find Out More
CNBC: Expect to see persistent pressures on Japanese government bonds in the coming month
Shigeto Nagai, Head of Japan Economics at Oxford Economics joins CNBC, to describe how the expected headline inflation will continue to rise and how it may take some time to see a “visible decline” in core inflation.Find Out More
APAC: Policymakers’ inflation worries should soon start to subside
Inflation in Asia over the past year has by and large been a story of external supply shocks, rather than excess demand. And with those external forces now easing, so too are we seeing inflationary pressures start to recede. We think inflation will drop much further over the first half of this year, giving policymakers the space to stop raising rates.Find Out More