MNI BRIEF: Japan Consumption Index Undermines BOJ's Solid View

The Bank of Japan's Consumption Activity Index fell 1.2% q/q in Q4 2023 for the first drop in two quarters following 1.0% in Q3, undermining the BOJ’s view that private consumption has continued to increase moderately, data released by the BOJ showed on Wednesday.

The Consumption Index fell 2.0% m/m in December for the first drop in two quarters following 0.4% growth in November.

The data also showed spending on services remained solid, but consumption of non-durable goods fell.

The BOJ data was consistent with the government’s real household spending, which fell 0.9% m/m in December for the third straight drop following -1.0% in November.

Real household spending fell 2.6% q/q in Q4 for the third straight quarterly drop following -3.4% in the Q3.

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