MNI DATA IMPAT: BOJ Oct Consumption Index Drops Sharply

     TOKYO (MNI) - The Bank of Japan's Consumption Activity Index posted the

first month-on-month drop in three months, down 7.4% on a seasonally adjusted

basis in October, data released Friday showed. 

     The fall came after upwardly revised gain of 3.8% in September and a

downwardly revised rise of 2.5% in August.

     Private consumption was hit hard by a post-tax hike drop and a string of

natural disasters in October that slowed demand.

     The October index fell 4.3% on quarter, reversing the 0.8% gain in the Q3

and +0.7% in Q2.

     The BOJ will likely lower its assessment of private consumption at its

two-day policy-setting meeting on Dec. 18-19 in the wake of the weak index in

addition to other weak spending data.

     The latest assessment was "private consumption has been increasing

moderately, albeit with fluctuations, against the background of steady

improvement in the employment and income situation."

     However, its unlikely the BOJ will change its view of the underlying

economy trend, as bank officials are focused on how private consumption evolves

in Q1.

     The BOJ's Consumption Activity Index looks to forecast revised private

consumption and is not a preliminary estimate.

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

[TOPICS: MAJDS$,M$A$$$,M$J$$$]