TOKYO: Household spending in Japan fell for the first time in 11 months in October, due to a pullback in demand after a last-minute surge before the consumption tax hike from 8 percent to 10 percent at the beginning of the month, government data showed Friday.

Consumption by households of two or more members dropped 5.1 percent from a year before to 279,671 yen in inflation-adjusted real terms, according to the internal affairs ministry data.

The drop, the steepest since the 5.3 percent in March 2016, came also because some stores suspended operations when strong Typhoon Hagibis struck the country in mid-October. It was larger than the 4.6 percent decline in April 2014, after the rate of the tax was raised from 5 percent to 8 percent at the start of the month.

"We have no idea how deep demand will go down" following the surge before the October tax hike, an official of the ministry said, pointing to the need to keep a close watch on consumption trends in the months to come.

Expenditures on eating out and alcoholic beverages in October plunged 9.4 percent and 15.7 percent, respectively. They are outside the scope of items for which the consumption tax rate has been kept at 8 percent as a measure to ease the pain of the hike. Food and soft drinks bought for takeaway are subject to the tax rate of 8 percent.

Following the tax hike, spending decreased also for commuter passes for trains, car tires and gasoline while falling sharply for a range of home appliances, including refrigerators and microwaves. Households reduced spending on such daily necessities as laundry detergent and toilet paper as well.

The survey also showed that real income at wage-earning households comprising two or more members in October fell 0.5 percent from a year earlier to 536,075 yen on average, down for three months in a row.

JIJI Press