TOKYO • Japanese consumer confidence worsened sharply to hit a six-month low in July, a government survey showed yesterday, a sign that households were feeling the pinch from rising food prices and tame wage growth.
A separate survey on service workers catering to consumers, such as taxi drivers and restaurant staff, found them to be upbeat on current business conditions but pessimistic on the outlook.
The survey findings cast doubt on the Bank of Japan's view that private consumption will emerge from the doldrums and help the economy rebound from an expected contraction in the April-June quarter. Worsening sentiment could hit consumption, which has not recovered fully from a sales tax hike last year.
The index gauging household sentiment, which includes views on incomes and jobs, fell 1.4 points from the previous month to stand at 40.3 in July, a Cabinet Office survey showed. It was the lowest reading since January.
The Cabinet Office downgraded its assessment of consumer confidence to say it is "stalling". But the central bank put on a brave face and held to its assessment that the economy is on track for a moderate recovery. "Private consumption will remain resilient as job and income conditions improve steadily," the Bank of Japan said in a monthly report for July.
The survey also found 87.7 per cent of the respondents expect consumer prices to rise a year ahead, up from 87.3 per cent in June.
A separate government poll on service sector workers, called the "economy watchers" survey for its proximity to retail trends, underlined the fragile state of recovery.
The service-sector sentiment index rose to 51.6 in July, up for the first time in three months, but the outlook index that indicates confidence in future conditions fell to 51.9 from 53.5 the previous month.
"Households are not up for spending yet," said an economist at Mitsubishi UFJ Research.
And a retailer said: "Household income isn't rising much in regional Japan even as food prices continue to rise. Consumers are keen to buy goods on discounts."