Rush for masks, toilet paper slows Japan's household spending decline

TOKYO (REUTERS) – Japan’s consumer spending fell in February but at a slower-than-expected pace as households scrambled for protective masks, toilet paper and staple food amid the worsening coronavirus pandemic.

But spending on travel and entertainment slumped, government data showed on Tuesday (April 7), a sign households were cutting back on non-essential purchases even before travel bans and social distancing policies took effect in Japan in March.

Household spending fell 0.3 per cent in February from a year earlier, marking the fifth straight month of declines but a smaller drop than a median market forecast for a 3.9 per cent decline.

It was also a much smaller decline than a 4.8 per cent fall in December and a 3.9 per cent drop in January, which were blamed largely on October’s sales tax hike.

Spending on toilet paper jumped 47 per cent in February from a year earlier, while that on domestic package tours slumped 37 per cent, the data showed.

“The coronavirus outbreak had both a positive and negative impact on February spending,” said Satoru Komatsu, director of the consumer statistics division at the internal affairs ministry. “The full effect of the outbreak will become clearer in March,” he told a briefing.

Separate data showed inflated-adjusted real wages rose for a second straight month in February, providing some relief for an economy under threat of a deep downturn over the pandemic.

Supply chain disruptions, travel bans and social distancing policies triggered by the pandemic have hit Japan’s economy, which is already on the brink of recession.

Analysts expect Japan’s economy, which shrank in the final quarter of last year, to post two more quarters of contraction as the pain from the pandemic deepens.

Prime Minister Shinzo Abe pledged on Monday to roll out an unprecedented economic stimulus package, equal to 20 per cent of economic output, as his government vowed to take “all steps” to battle the fallout from the coronavirus.

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