Japan's household spending fell in February for the first time in three months

According to the Ministry of Internal Affairs and Communications of Japan, the country's household spending in February decreased by 0.5% year-on-year due to a decline in expenditures on clothing and footwear, housing, and food. The result fell below the forecast of economists, who had expected a 0.8% decline.

As suggested by Shinichiro Kobayashi, chief economist at Mitsubishi UFJ Research and Consulting, personal consumption is expected to be negative for the first quarter compared to the previous reference period.

Consumer spending, which accounts for more than half of Japan's GDP, is one of the key indicators the country's central bank is monitoring when setting the course of its monetary policy.

The country's inflation rate has held at or above the regulator's price target for nearly three years now, limiting consumer spending. The US tariffs imposed this week, as Bloomberg points out, could put additional pressure on the Japanese economy.

Central bank officials are closely watching the prospects of an economic slowdown in Japan due to US trade policies. According to Bloomberg, some analysts forecast a decline in the country's GDP growth of more than 0.5%.