Japan's Service-Sector Mood Sours on Rising Cost of Living
Japan's service-sector sentiment has declined for the second consecutive month, reaching its lowest level since July 2022, as the rising cost of living significantly impacts consumer spending. The sentiment index dropped to 45.6 in February, reflecting concerns from various sectors, including transportation and hospitality, about decreased customer traffic and spending due to inflation and adverse weather conditions. Despite a moderate recovery trend, the persistent inflationary pressures continue to undermine household purchasing power, as evidenced by a 1.8% drop in inflation-adjusted real wages.
- This decline in service-sector sentiment highlights the interconnectedness of economic factors, where rising costs not only affect business operations but also consumer behavior, potentially leading to a broader economic slowdown.
- What measures can be taken by the government or businesses to alleviate the impact of rising living costs on consumer spending and service-sector confidence?