TOKYO: Japan’s household spending edged up in December, capping a solid quarter for consumers and adding to signs the economy rebounded during a lull in virus cases at the end of 2021.

       Bigger outlays on housing, transportation and education pushed up overall spending by 0.1% from November’s level, the ministry of internal affairs reported yesterday.

       Spending rose 4.6% in the fourth quarter, compared with the prior three months when tanking consumption caused Japan’s recovery to go into reverse.

       A separate report showed wages fell unexpectedly in December for the first time in 10 months, illustrating the difficult challenge for Prime Minister Fumio Kishida as he tries to make worker pay gains a centrepiece of his economic agenda.

       Yesterday’s data also showed household spending remained slightly below the prior year’s level, illustrating how damaging the country’s on-again-off-again restrictions to contain the virus have been to consumers.

       Still, signs of stronger spending to end the year suggest the recovery was building momentum before the Omicron variant of the virus triggered a record wave of infections in recent weeks.

       Analysts had been forecasting Japan’s lagging economy would finally get on a more sustainable track in the final months of 2021 after shrinking in five of the prior nine quarters.

       Now, though, the growth projected for last quarter is at risk of being short-lived.

       The household spending figures are the last big data point the government will use to compile its fourth quarter growth report, due next Tuesday.

       Daily case numbers have surged more than twenty-fold since the start of the year to above 100,000, deaths from the virus are close to Japan’s worst levels, and consumer confidence has plunged in recent weeks.

       Service businesses are also bracing for more restrictions, with the Kishida administration reportedly set to extend a state of quasi-emergency in Tokyo and 12 other areas by another three weeks into early March.

       The quasi-emergency allows local governments to push bars and restaurants to close early and restrict alcohol sales.

       Low rates of booster shots against the virus may be another hurdle that’s inhibiting consumers, whose spending accounts for more than half of the economy.

       While most Japanese have received two vaccine doses, only about 6% have gotten a third shot, by far the lowest among advanced nations. Kishida on Monday set a target of speeding boosters to a million shots a day by the end of the month.

       Japanese consumers aren’t facing the kind of broad-based inflation that is squeezing households in the United States and elsewhere, but price jumps for gas and home-heating are doing damage, especially given the softness in wages. — Bloomberg