October 30, 2014 / 1:26 AM / 5 years ago

Japan PM Abe: Sales tax hike hurts consumers' purchasing power

Japan's Prime Minister Shinzo Abe speaks to the media at his official residence in Tokyo October 20, 2014. REUTERS/Toru Hanai

TOKYO (Reuters) - Japanese Prime Minister Shinzo Abe said on Thursday he will scrutinize how an increase in the sales tax affects the country’s prospects for ending deflation as a higher levy hurts consumers’ purchasing power.

“The key is whether Japan’s economy can return to a growth path in the July-September quarter,” Abe told parliament.

“I’d like to make the decision with a cool mind, to ensure that our ‘Abenomics’ policies are a complete success,” he said.

Japan’s economy suffered a severe contraction in the second quarter as a sales tax hike in April hurt household spending. Abe has said he will decide by the end of this year whether to proceed with a scheduled second increase in the sales tax rate, to 10 percent next October.

Reporting by Leika Kihara and Tetsushi Kajimoto; Editing by Chris Gallagher

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