May household spending posts surprise yy drop
Spending down 1.9 mm in May vs forecast 0.8

TOKYO, July 8 Reuters Japan39;s household spending posted a surprise drop in May, falling for the third consecutive month as the global chip shortage hurt car sales in a worrying sign for the outlook of the world39;s thirdlargest economy.

Households are also facing pressure from the yen39;s sharp decline that is pushing up prices of imported fuel and food at a time when consumer confidence still has to fully shake off the drag of the coronavirus pandemic.

Spending slipped 0.5 in May from a year earlier, government data showed on Friday, dragged down by lower expenditure on vegetables as well as cars, where supplies have been hit by chip shortages and supply chain disruption.

The data, which was much weaker than the median estimate for a 2.1 increase in a Reuters poll, showed people dialled back on spending on fish and vegetables to eat at home, while loosening their pursestrings on services such as eating out.

The survey shows that consumer spending is on a declining trend, said Takeshi Minami, chief economist at Norinchukin Research Institute.

While it may not be fully capturing actual spending, there39;s a good likelihood that rising prices are suppressing consumption.

Spending also dropped from the previous month, falling 1.9, weaker than a forecast 0.8 rise.

Policymakers have been worried about growing pressure on households which are facing surging prices of food and…