July 10, 2013 / 7:57 AM / 7 years ago

UPDATE 1-Japan consumer mood slips in challenge to Abenomics

* Consumer sentiment index falls 1.4 points to 44.3 in June
    * More households expect prices to rise a year from now
    * Households report first fall in income growth in six
months
    * Households feeling pinch from rising energy, import prices


    By Kaori Kaneko
    TOKYO, July 10 (Reuters) - Japanese consumer confidence
slipped in June for the first time in six months as consumers
reported slowing income growth and rising prices, exposing the
challenges to Prime Minister Shinzo Abe's plan to revive the
economy by generating inflation.
    Household sentiment fell 1.4 points from May to 44.3 in
June, with the mood worsening for all four components --
livelihood, income, jobs and spending appetite for durable
goods, the government survey showed.
    The survey showed 83.9 percent of respondents expect prices
to rise a year from now, up 0.8 point from the previous month to
the highest ratio in nearly five years.
    Abe has pursued a policy of aggressive stimulus, dubbed
Abenomics, to revive the economy and end 15 years of deflation.
The early signs have been encouraging, but the plan in part
relies on growth boosting wages -- something yet to be seen.
    Indeed, the survey's index of income growth fell 0.6 point
to 41.6 in June, the first fall in six months.
    The Bank of Japan is hoping its strong commitment to boost
prices through massive stimulus would change the widely-held
perception that deflation will persist and so encourage
consumers to spend now rather than later.
    The survey found consumers expecting prices to rise as
higher raw material costs and a weaker yen push up electricity
bills and prices of groceries, but the perceptions of weak wages
could see them tighten spending.
    Japan's corporate goods price index, which tracks wholesale
price moves, rose 1.2 percent in June from a year earlier, the
biggest increase since November 2011, the BOJ said on Wednesday.
    The government's sentiment survey, which began in 1982,
targets households with two more people. A reading below 50 in
the sentiment index shows pessimists outnumber optimists.
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