Japan's consumer confidence is now lower with inflation woes

Japan’s consumer confidence weakened for a third consecutive month in March, as COVID-19 curbs and rising prices dampened sentiment, an official survey showed on Friday.

The sentiment index for general households fell to 32.8 in March from 35.2 in February, according to the Cabinet Office survey, says Reuters.

Consumer confidence in Japan weakened for the fourth straight month as the consumer confidence index declined to 32.7 in Mar-22 (Feb-22: 35; Nov-21: 39.3).

Japanese households expressed dissatisfaction about the tighter Covid-19 restrictions affecting their livelihood, with the sub-index for livelihood falling to the lowest level since May-20.

With heightened concerns over employment and income growth, consumers indicated reduced willingness to buy durable goods, which was the weakest level in nearly 2 years.

Consumer confidence & Inflation

In terms of inflation outlook, 92% of respondents expected that prices will increase in the next 12 months.

The finding signals the strongest response to the 1-year inflation expectation. While the weakening confidence reflects continued concerns that the tight Covid-19 restrictions will affect spending outlook and livelihood, the easing of Covid-19 restrictions and reopening of the economy to international travels will boost confidence in the coming months.

“Nevertheless, rising prices and ongoing challenges from Covid-19 may continue to weigh down on consumer confidence, and thus making Japan’s consumers remain cautious on their future spending plans,” says MIDF.