TOKYO (MNI) – Japan’s average household spending rose a real 1.1%
from a year earlier to Y285,274 in July, as heat waves boosted sales of
air-conditioners and beverages while some consumers rushed to car
dealerships before the end of government subsidies for low-emission
vehicles in September, data from the Ministry of Internal Affairs and
Communications showed Friday.

It was the second consecutive year-on-year rise in household
spending in inflation adjusted terms.

But the July figure came in slightly weaker than the consensus call
of +1.5%. In nominal terms, spending rose only 0.1% y/y.

It followed a 0.5% rise in June and declines of 0.7% in both May
and April, and a 4.4% jump in March (when there were rush purchases of
consumer electronics), the latter being the largest y/y gain since +5.0%
in May 2004.

The May 2009 rise (+0.3%) was the first y/y gain in real terms in
16 months.

Real spending rose in seven out of the 10 categories in July:
furniture and household utensils including air-conditioners and washing
machines (+9.8%), transportation and communication led by automobiles
and gasoline (+4.9%), clothing and footwear (+4.4%), medical care
(+3.6%), education (+3.4%), other consumption expenditures (+0.6%) and
food (+0.3%).

These gains more than offset lower spending on home repairs and
maintenance (-8.5%), utilities (-0.7%) as well as culture and recreation
(-0.5%).

The government plans to finish providing subsidies for buying
energy-efficient vehicles at the end of September but it will continue
waiving or applying lower tax rates for buying and owning low-emission
cars and trucks.

The government’s reward program for buying greener consumer
electronics has continued to support demand for certain models of
flat-screen TVs, refrigerators and air conditioners/heaters.

The average real income of salaried workers’ households fell 1.0%
in July to Y562,094, posting the first y/y drop in two months following
a 5.6% rise in June. It dropped a nominal 2.0% in July.

Real disposable income in the average salaried workers’ household
fell 0.3% in July to Y463,447, the first year-on-year drop in two
months. It fell 1.3% in nominal terms in July.

tokyo@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4833 **

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