In October 2024, Japan experienced a notable decline in consumer confidence, with key metrics highlighting growing apprehension among consumers regarding future employment and income stability. The seasonally adjusted Consumer Confidence Index settled at 36.2, marking a decrease from September's 36.9.
This downturn poses challenges for the Bank of Japan, which aims to stimulate adequate labor demand to foster real wage growth, and subsequently, an increase in consumer spending that would drive economic expansion. Analysis of consumer sentiment revealed a drop in overall livelihood perception, with the index decreasing to 34.2 from the previous month's 34.4.
Meanwhile, expectations concerning income growth also diminished, falling to an index value of 39.4 from September's 40.3. Employment-related sentiments reflected a similar trend, with the index declining from 42.2 in September to 41.6 in October. Additionally, the index measuring the willingness to purchase durable goods fell to 29.7, compared to the prior month's 30. Remarkably, consumer confidence has consistently remained below pre-pandemic levels observed before 2019.
Concerns over future inflation are also significant, as reflected in the consumer survey conducted on October 15, which indicated that 93.2% of respondents anticipate rising prices—a figure largely unchanged from previous months. This survey encompassed responses from 8,400 households, with a high participation rate of 84.9%.
The implications of these findings are critical for understanding Japan's evolving economic landscape and guiding future policy decisions..