MNI BRIEF: BOJ August Consumption Index Falls for Second Month

The Bank of Japan's Consumption Activity Index fell 1.1% m/m in August, undermining expectations that private consumption had increased moderately despite Covid-19, data released on Friday showed.

The drop in August was the second straight fall following a revised 0.7% fall in July as durable goods spending fell due to high prices caused by the weak yen.

The BOJ's Consumption Activity Index is designed to forecast revised private consumption, not act as a preliminary estimate.

The BOJ data was consistent with the government’s household spending data, which fell 1.7% m/m in August. It was a second straight fall following a drop of 1.4% in July. The weak spending was caused by the drop in real purchasing power amid weak real wages.

The consumer price index (CPI) used by the ministry to calculate real wages, which includes fresh food prices but excludes owners' equivalent rent, rose 3.5% y/y in August, up from +3.1% in July.

That was the fastest since the 3.9% pace recorded in September 2014 and outpaced a 1.7% rise in nominal total cash earnings following a revised 1.3% gain in July.