Japan's July household spending sees steepest fall since January 2024

Japan's July household-spending figures:

Spending was down 3.6% from a year earlier, the largest decline since January 2024.

• The forecast had been for a fall of 1.6%, while the prior reading was -3.3%.

The odds of a September BOJ hike sit around 87%, leaving the move almost fully priced in. Rising inflation and higher yields are the main forces behind that pricing, not the strength of consumer demand. Weak household spending is a familiar, ongoing theme rather than a fresh surprise, and it leaves intact the inflation and yen-weakness arguments that are actually carrying the case for a hike. The BOJ is moving to tighten even as spending stays weak; it is not acting on the back of strong consumption.