Japan's consumer confidence logs steepest fall in 2 years in March

© Kyodo News

Japan's consumer confidence dropped 2.4 points in March from the previous month, posting the steepest fall in 23 months due to increasing concerns over price rises exacerbated by Russia's invasion of Ukraine, the government said Friday.

The seasonally adjusted index of sentiment among households consisting of at least two people stood at 32.8 in March, the lowest since January 2021 and down from 35.2 in February for the third consecutive month of decline, according to data released by the Cabinet Office.

The index indicates consumers' economic expectations for the coming six months, with a reading below 50 suggesting that pessimists outnumber optimists.

The largest drop since April 2020 reflects the impact of Russia's attack on Ukraine that sent the prices of oil, gas and wheat soaring and the spillover effects on other products.

The Cabinet Office lowered its basic assessment of the sentiment index for the third consecutive month, saying consumer confidence has been "weakening further."

"It is necessary to continuously monitor how the prices of natural resources and raw materials will affect consumer sentiment and consumption behaviors," an official at the Cabinet Office said at a briefing, adding that the outlook remains unclear.

The survey showed a total of 92.8 percent of the respondents expect prices to rise in the year ahead, up 1.1 percentage point to the highest figure since comparable data became available in April 2013.

Among the total, 53.1 percent said they expect a price hike of 5 percent or more.

The survey was conducted between March 8 and 22 after Russia launched a full-scale invasion of Ukraine in late February.

The consumer confidence survey covered 8,400 households, including 2,267 single-member households, with 6,588 of them, or 78.4 percent, responding.