MNI BRIEF: Solid Consumption Index Backs BOJ Spending View

The Bank of Japan's Consumption Activity Index posted its first m/m rise in two months, rising 0.7% in August compared to July's 0.0% read, supporting the bank's view that private consumption has increased at a moderate pace despite price rises, data released by the BOJ showed on Friday.

Solid spending on nondurable goods drove the gain, however, spending on services edged lower. The BOJ's Consumption Activity Index is designed to forecast revised private consumption, not act as a preliminary estimate. The data was consistent with the government’s real household spending, which rose 3.9% m/m in August for the first rise in two months following July's 2.7% decline.

BOJ officials, however, remain vigilant against the risk private consumption could lose momentum amid persistent high prices as real wages continue to fall. (See MNI BRIEF: Japan Aug Real Wages Fall 2.5% Vs. July -2.7%)