Japan lowers assessment as consumer confidence falls in January

Japan’s consumer confidence worsened in January for the second straight month amid a resurgence of coronavirus infections and higher consumer prices, the government said Monday, downgrading its assessment for the first time in eight months.

The seasonally adjusted index of sentiment among households made up of two or more people fell 2.4 points to 36.7, the Cabinet Office said. The index indicates consumers’ economic expectations for the coming six months, with a reading below 50 suggesting pessimists outnumber optimists.

The Cabinet Office downgraded its basic assessment of the index, saying the consumer confidence has been “stalling.” In December, when the index fell 0.1 point, the office said sentiment “continued to pick up.”

During the survey period — Jan. 7 to 20 — daily coronavirus cases in Japan shot up to record highs, surpassing 45,000 cases.

With a spread of the highly transmissible omicron variant, the government decided to put Tokyo and other prefectures under a coronavirus quasi-state of emergency, which allows the governors to ask local restaurants and bars to close early and stop or limit the serving of alcohol.

In addition to increasing COVID-19 cases, “price hikes of daily necessities since last year dampened sentiment,” a government official said.

Among the survey’s four components, consumers’ assessment of livelihoods fell 1.8 points to 36.8 following a 0.5-point rise in December, while their readiness to buy new durable goods sagged 2.2 points to 34.3 after remaining unchanged at 36.5 in the previous month.

The survey showed a total of 89.7% of households expected consumer prices to rise in the year ahead, with 31.3% predicting it to accelerate by 5% and higher. The total figure, which matched that logged in March 2014, was the highest since comparable data became available in April 2013.

The consumer confidence survey covered 8,400 households, including 2,688 single-member households, with valid responses received from 6,732, or 80.1%.