November 1, 2019 / 6:05 AM / 19 days ago

Japan Sept. household spending seen jumping ahead of sales tax hike: Reuters poll

FILE PHOTO: A woman pays money as she buys fruits outside a vegetable store at Ameyoko shopping district in Tokyo, Japan, January 27, 2016. REUTERS/Yuya Shino

TOKYO (Reuters) - Japan’s household spending likely rose at the fastest pace in nearly 20 years in September, a Reuters poll found on Friday, as shoppers rushed to buy goods ahead of a sales tax hike in October.

Household spending was seen rising 7.8% in September from a year earlier, the poll of 14 economists showed, the fastest pace since comparable data from 2001.

Spending had spiked 7.2% in March 2014, a month ahead of the previous sales tax increase, but then fell sharply and did not return to growth for more than a year.

“Retail sales data has shown there was rush demand for luxury goods, electrical appliances, cosmetics and alcohol,” said Takeshi Minami, chief economist at Norinchukin Research Institute.

“The focus will be on when subsequent falls in household spending after the tax hike will wane.”

Japan rolled out a twice-delayed increase in the sales tax to 10% from 8% on Oct. 1, a move seen as critical for fixing the country’s tattered finances but that could tip the economy into recession by dampening consumer sentiment.

Retail sales grew at the strongest pace in 5-1/2 years in September as consumers rushed to buy big-ticket items to beat the tax hike.

The government will announce household spending data at 8:30 a.m. Japan time on Nov. 8 (2330 GMT, Nov. 7).

The Bank of Japan kept monetary policy steady on Thursday as expected but gave the strongest signal to date that it may cut interest rates in the near future, underscoring its concern that overseas risks could derail a fragile economic recovery.

Reporting by Kaori Kaneko; Editing by Kim Coghill

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