May household spending falls 1.8 yryr vs f39;cast 0.1
Rising food prices, weak yen weigh on consumption
Analysts expect rebound in Q2, divided on rate hike timing
Data likely to affect BOJ39;s forecast, July rate decision

TOKYO, July 5 Reuters Japanese household spending unexpectedly fell in May as higher prices continued to squeeze consumers39; purchasing power, data showed on Friday, complicating the central bank39;s decision on how soon to raise interest rates.

Many analysts expect consumption to rebound in coming months as big wage hikes offered by companies and a tax break aimed at cushioning the blow from rising living costs reach households.

But the soft reading underscores the fragile nature of consumption, and casts doubt on the Bank of Japan39;s BOJ view a solid economic recovery will keep inflation durably around its 2 target a prerequisite for raising interest rates.

The BOJ has been saying all along that consumption is firm. Today39;s data could force the bank to alter that view and make it difficult to justify a rate hike in July, said Masato Koike, senior economist at Sompo Institute Plus.

Consumer spending fell 1.8 in May from a year earlier, far short of the median market forecast for a 0.1 uptick, as rising food prices weighed on spending for other items, data showed.

Demand for overseas package tours also fell due to the weak yen, which makes travelling abroad expensive. Spending fell 0.3 in May on a seasonally adjusted, monthonmonth basis….