Note: Consumer confidence index was published quarterly before Mar.2004 and monthly data is available after Apr. 2004.
Published monthly by the Cabinet Office. Updated to the month of January, 2017 (published on February 2nd, 2017).
Recent data trend
In January 2017, Japan’s consumer confidence index rose to the highest level since since September 2013 when Tokyo secured the rights to host 2020 Olympics. The recent improvement in the consumer sentiment indicates that the rise in stock prices and a better corporate sentiment due to the weakening of yen may also be helping households.
Among the sub components, the income growth component has been steadily rising in the past 2 years. It shows that household do appreciate a rise in their income, however slow it must be. The index for Asset Value also shows that the dent they experienced in 2016 seems to have healed in the second half of 2016. In terms of inflation expectations among Japanese households, we see that percentage of consumers who expect prices to go up was 74.9%, much lower than the recent peak of 89.2% in April 2015. In our view, while the recent 6 months have been favorable for consumer sentiments in Japan, Japanese consumers still remain overall cautious in their outlook. Despite the improvement we saw in the second half of 2016, the consumer confidence index seem range bound and significantly weaker than the prevailing level back in 2004-2007.
Brief overview of "Consumer Confidence Index"
Consumer confidence index, published by Cabinet Office as a part of "Consumer confidence survey", aims to measure Japanese households' sentiment toward consumption activities. The index consists of four sub-categories: overall standard of living, income growth, employment and willingness to buy durable goods. By construction, an index level above 50 implies that consumers expect the situation is improving. Japanese consumers seem to have a tendency to think negatively about the future though. The average index level between 1983 and 2013 is 42.8, and the index has rarely risen above 50.
Since 2004, respondents are also asked for their price expectation. Price expectation is measured based on the ratio of households expecting prices to go up, stay the same or go down. Japanese consumers have a tendency to overestimate the likelihood of a rise in price. Between 2005 and 2012, on average 57.2% of households replied that they expect price to rise, 25.9% replied price to remain flat and only 8.5% replied they expect price to fall. In reality, Japanese CPI remained virtually flat throughout the period, in fact declining marginally by 0.7% in total between 2005-2012.