MNI: Govt Official Warns Of Impact of High Prices on Sentiment

High prices caused by surging crude oil prices will have an adverse impact on consumer sentiment in the coming months, a senior official at the Cabinet Office said on Tuesday.

Japanese consumer spending has been clearly falling since mid-January on the back of the quasi-emergency measures to combat the spread of Omicron and a slower pace of vaccinations, high-frequency data showed.

“If the high costs will not be transferred to retail prices, corporate profits will be squeezed,” the official told reporters, adding it is still uncertain how private consumption will evolve for the rest of the first quarter.

The Q4 GDP rose 1.3% q/q, or an annualized 5.4% following a revised -0.7% q/q, or an annualized revised -2.7% for the third quarter.

Business investment rose 0.4% q/q in Q4, the first rise in two quarters following a revised -2.4% in Q3. The median forecast was for a 0.8% rise.

Economic growth in the fourth quarter of 2021 rose for the first time in two quarters mainly on an increase of automobile exports, especially to the U.S., the official said.

“Exports are in a rising trend on a whole but they are somewhat weighed down by the slowing Chinese economy,” the official said.

He added that private consumption rebounded in the fourth quarter as the government lifted the state of emergency, contributing to boosting economic growth during the period