FT with a piece looking at the impact of the sales tax hike in Japan
(Tax was raised on octo October 1)
- figures from Nowcast, which uses supermarket scanners to compile real-time data on consumption and inflation, sales fell 10-20 per cent during the first week of October compared with the same period the previous year.
- Spending patterns ahead of the increase had suggested that consumers were not behaving as they did ahead of the last tax rise in 2014, when a post-increase slowdown led to recession.
The article concludes with an outlook for the Bank of Japan:
- BoJ has promised a review at its meeting on October 31
- Signs of slowing consumption will strengthen the case for monetary easing
- but … the BoJ may fear that deeper negative interest rates could deal a further blow to consumer confidence, encouraging it to stay on hold unless there is a sharp rise in the yen.