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Pessimistic Consumer Sentiment Contradicts Bank of Japan Optimism

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Published on : Aug 11, 2015

Haruhiko Kuroda, the Governor of the Bank of Japan, only recently rejected claims of an economic slowdown. The economy, however, is not showing any signs of revival.

The Japanese consumer sentiment in July had fallen 1.4 points away from June’s tally of 40.3. It is registered as the largest slide in the past year and a half. The data was released by the Cabinet Office on Monday. It showed that the consumers have grown increasingly negative regarding the income levels, asset prices, as well as employment rates. The figure lies in stark contrast to the assumption made by Kuroda on Friday that the household sentiment is continuing to improve.

The policy makers still continue to remain optimistic and have blamed the fall on imperfect weather conditions and a temporary weakness of overseas markets. On the other hand, a failing confidence reveals the finer problems that continue to perturb the leaders of Japan by hampering the national economy.

Nearly 60% of Japan’s economy is held by consumption. This, analysts reveal, signifies that the nation’s weakness undermines Kuroda’s attempts to create an inflation of 2% before 2016, in view of the currently declining Japanese exports.

Credit Suisse responded in a report, saying they continue to believe that the degrading scope of purchasing by the Japanese consumer is attributed to the food inflation. It has happened in the middle of a slow improvement rate in wages as well as employment. It will be detrimental to the consumption levels of the domestic household in Japan.

In a separate monthly report on economics released by the Bank of Japan, they stated that their improvements in the new inflation measure have come to a standstill.

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