Slowing Inbound Demand and Consumers’ Inclination to Economize

「Consumers' focus on protecting household finances has strengthened due to the weaker yen and higher prices for essential goods such as gasoline and food.」

「In Japan, a recovery in personal consumption is expected as inbound demand expands and income increases. However, the outlook is expected to remain uncertain due to surging resource and energy prices and higher prices for essential goods.」

「The economy has shown a gradual recovery, supported by improvements in employment and income conditions and other factors. At the same time, essential goods such as gasoline, utilities and food have become more expensive due to unstable conditions overseas and the prolonged weakness of the yen, heightening consumers' focus on protecting household finances.」

「In Japan, the economy is on a gradual recovery trend, supported by a pickup in personal consumption against the backdrop of improving employment and income conditions accompanying the recovery in domestic demand and the expansion of inbound demand. At the same time, perceived inflation has risen as essential goods were repeatedly repriced due to the prolonged weakness of the yen and surging raw material and resource prices resulting from the Russia-Ukraine crisis.」

「In Japan, the economy is on a gradual recovery trend, supported by a pickup in personal consumption against the backdrop of improving employment and income conditions accompanying the recovery in domestic demand and the expansion of inbound demand. At the same time, the outlook remains uncertain as the yen continues to weaken in foreign exchange markets and raw material and resource prices remain elevated due to the prolonged situation between Russia and Ukraine.」

「At the same time, the removal of restrictions on activities related to COVID-19 shifted consumer behavior toward spending associated with going out, including travel, leisure and dining out. The prolonged weakness of the yen also increased the number of foreign visitors, and inbound demand showed signs of recovering to near pre-pandemic levels.」

「The removal of restrictions on activities related to COVID-19 and the weaker yen led to an increase in foreign visitors and signs that inbound demand was recovering to near pre-pandemic levels.」

「In Japan, the removal of restrictions on activities related to COVID-19 led to the successive resumption of various events, a recovery in foot traffic across the country and an improvement in consumer sentiment. At the same time, consumers' perceived inflation has risen as essential goods were repeatedly repriced due to surging raw material and resource energy prices resulting from the Ukraine crisis.」

「In Japan, the easing of restrictions on activities under COVID-19 led to growth in inbound consumption and domestic travel demand. At the same time, concerns over an economic slowdown have heightened as higher resource prices and the weaker yen caused price increases to spread, particularly among essential goods such as energy and food.」

「In Japan, the easing of entry restrictions introduced as a COVID-19 countermeasure in October 2022 led to an increase in visitors to Japan and the first signs of a recovery in inbound consumption. In the same month, the government's nationwide travel subsidy program, "National Travel Support," began, and demand for going out and leisure activities also started to recover. However, consumers' focus on protecting household finances has strengthened as gasoline, electricity and other essential goods, including food, rose in price successively due to the rapid depreciation of the yen and the prolonged situation in Ukraine.」

「Consumers' propensity to consume has been declining due to the impact of the situation in Ukraine and the rapid depreciation of the yen since March 2022, as well as successive price increases for essential goods such as gasoline, electricity and food.」

「The propensity to consume has continued to decline, affected by consumers' expectations of higher prices amid a resurgence of infections caused by the Omicron variant of COVID-19 and successive price increases for essential goods, including gasoline, electricity and food, resulting from surging crude oil and raw material prices.」

「In Japan, the lifting of the state of emergency and other measures in September 2021, following the progress of COVID-19 vaccinations and the number of new infections remaining low, together with the gradual easing of restrictions to normalize economic and social activity, led to signs of a recovery in personal consumption. However, concerns and uncertainty about the outlook remained due to successive price increases for gasoline, food and other products resulting from surging crude oil prices, as well as concerns over a resurgence of infections caused by the Omicron variant of COVID-19.」

「The recovery trend has been slowing as infections have resurged due to highly infectious and transmissible COVID-19 variants.」

「Amid the prolonged impact of COVID-19, the economy has shown signs of recovery, supported by efforts by governments around the world to deploy substantial fiscal stimulus and the wider rollout of preventive COVID-19 vaccinations. In Japan, although vaccinations for healthcare workers and older adults were gathering pace, the impact of the resurgence in infections led to the application of priority preventive measures in some areas in April 2021, and Japan's third state of emergency was declared that same month.」

「During the current second-quarter consolidated cumulative period, from 1 September 2020 to 28 February 2021, Japan's economy remained uncertain as the global impact of COVID-19 continued for an extended period and concerns grew about the spread of coronavirus variants. Domestically, a second state of emergency was declared in January 2021 covering 11 prefectures and municipalities, restricting the movement of people and goods again. However, lifestyles, consumption behavior and working styles changed under various constraints, including prolonged requests to refrain from going out and working from home, with increased demand for staying-at-home-related products such as household goods and interiors that enrich lifestyles, as well as demand related to digital transformation (DX).」

「As the worldwide spread of COVID-19 continued unabated and the global economy began to stagnate again, the Japanese government and local authorities stepped up measures to stimulate consumption related to travel, dining and events after the state of emergency was lifted, with a view to restarting economic activity. However, as the number of COVID-19 infections began rising again in November 2020, concern about COVID-19 and the focus on protecting household finances increased further.」

「As the global spread of COVID-19 caused the global economy to rapidly contract and deteriorate amid bans on overseas travel, restrictions on the movement of people in affected areas and urban lockdowns prohibiting corporate activity, Japan also came under downward pressure as the government issued a state of emergency in April 2020, and inbound demand declined.」

「As the global spread of pneumonia caused by the novel coronavirus raised concerns about a global economic slowdown, inbound demand in Japan declined as the number of visitors to Japan fell in response to requests to refrain from traveling to Japan. There was also a growing tendency to refrain from sporting and other events and to avoid going out and crowded places to prevent infection. Some changes in personal consumption were observed, including staying-at-home consumption such as online shopping, prepared meals and takeaway food from restaurants.」

「However, personal consumption remained conservative, with disposable income directed toward savings as concerns about the future of social security systems, including pensions and medical care, and higher prices for food and daily necessities resulting from increases in labor and raw material costs heightened households' focus on protecting their finances.」

「Although the domestic economy had continued to expand moderately, concerns about inflation resulting from the consumption tax rate increase implemented in October 2019 and anxiety about retirement funds stemming from the report on asset building and management in an aging society could cause consumers to become more selective.」

「In personal consumption, there were some signs of improving consumer sentiment, including special demand during the long holiday associated with the succession to the Imperial throne and revival consumption as hit products from the bubble era and other past periods were redesigned in a contemporary style and became popular again. However, concerns about the future of social security, including the burden of social insurance premiums, pensions and the medical system, intensified, and a conservative propensity to consume continued, with disposable income being directed toward savings.」

「While there were signs of improving consumer sentiment amid expectations of special demand from the change of era and a long holiday period, disposable income was directed toward savings and the propensity to consume continued to decline because of anxiety about the outlook for future life planning, including income and assets.」

「However, amid an economic environment in which disposable income is being directed toward savings and the propensity to consume continues to decline because of anxiety about the outlook for future life planning, including income and assets,」

「In personal consumption, disposable income growth has slowed as social insurance premiums and other costs have increased. Consumers' perceived prices have risen across a broad range of areas closely connected to daily life, including food, public utilities and delivery services, increasing the burden on household budgets. At the same time, consumption is becoming increasingly polarized, with some high-priced purchases emphasizing value, such as health, safety and preferred products, even at somewhat higher prices, and consumers becoming increasingly discerning in selecting products and services.」

「In personal consumption, disposable income growth has slowed as social insurance premiums and other costs have increased. Consumers' preference for saving has strengthened as the prices they experience have risen, owing to higher electricity and gas charges caused by international crude oil market conditions and higher fresh food prices due to the cold spell since the beginning of the year. At the same time, consumption is becoming increasingly polarized, with some high-priced purchases emphasizing value, such as health, safety and preferred products, even at somewhat higher prices, and consumers becoming increasingly discerning in selecting products and services.」

「In personal consumption, disposable income growth has slowed as social insurance premiums and other costs have increased, and consumers have yet to feel that the economy is truly flourishing, leaving their preference for low prices firmly entrenched. At the same time, consumption is becoming increasingly polarized, with some high-priced purchases emphasizing value, such as health, safety and preferred products, even at somewhat higher prices, and consumers becoming increasingly discerning in selecting products and services.」

「Although inbound demand showed signs of leveling off for a time, it has recently begun to recover, partly due to the weaker yen. In personal consumption, consumers' preference for saving remains firmly entrenched as disposable income growth stagnates due to higher social insurance premiums and other costs, while consumption is becoming increasingly polarized, with some high-priced purchases placing emphasis on value, such as health and safety, even at somewhat higher prices.」

「Per-capita spending fell sharply due to China's tax changes and rapid changes in the consumption behavior of visitors to Japan, such as the shift from purchasing goods to purchasing experiences, resulting in downward pressure on the economy as inbound demand showed signs of leveling off. While uncertainty about the international outlook increased because of Europe's political situation and political instability in neighboring countries, consumers' preference for saving remained firmly entrenched as disposable income growth stagnated due to higher social insurance premiums and other costs. At the same time, some consumers began to place greater emphasis on value, such as health and safety, even at somewhat higher prices.」

「The economic environment remained difficult. Per-capita spending fell sharply due to China's tax changes and rapid changes in the consumption behavior of visitors to Japan, such as the shift from purchasing goods to purchasing experiences, resulting in downward pressure on the economy as inbound demand showed signs of leveling off. While uncertainty about the international outlook increased because of Europe's political situation and political instability in neighboring countries, consumers' preference for saving intensified as disposable income growth stagnated due to higher social insurance premiums and other costs, leaving personal consumption lacking strength.」

「The economic environment remained difficult, with downward pressure on the economy evident as per-capita spending fell sharply due to China's tax changes, the stronger yen and rapid changes in the consumption behavior of visitors to Japan, such as the shift from purchasing goods to purchasing experiences, causing inbound demand to show signs of leveling off. Uncertainty about the outlook also increased as corporate earnings, particularly those of exporters, deteriorated due to the stronger yen, while stagnant growth in disposable income resulting from higher social insurance premiums and other costs constrained personal consumption and heightened consumers' preference for saving.」