(April 9): Sentiment among Japan’s households deteriorated by the most since the early stages of the Covid pandemic following the outbreak of the war in Iran.
Confidence among multi-person households plunged to 33.3 in March from a revised 39.7 in the biggest drop since April 2020, according to a Cabinet Office report Thursday. The ratio of those expecting to see inflation a year from now jumped to 93.1%, the highest since September, it showed.
The latest data suggest escalating tensions in the Middle East have already weighed heavily on Japan’s consumers, raising the risk that softening sentiment could lead to a decline in consumer spending. Elevated oil prices may hit the economy hard as Japan relies on imports of natural resources from the region. The impact would increase if there’s a prolonged period before maritime traffic over the Strait of Hormuz is restored to normal.
In the middle of last month, Japan’s gasoline prices hit the highest in three decades before coming down a little owing to government subsidies. A separate Cabinet Office report Wednesday showed that the outlook of merchants also plummeted to the lowest since December 2020.
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