Japan Consumer Sentiment Drops Most Since April 2020 on Omicron

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Japan's consumer sentiment fell by the biggest margin since the height of the pandemic crisis in January, as Covid infections rocketed with the spread of the omicron variant and as inflation expectations continued to tick up. 

The consumer confidence index declined by 2.4 to 36.7, the biggest drop since April 2020, the Cabinet Office reported Monday. That compared with a 37.0 estimate by analysts. The reading was the lowest since August, during a summer wave of infections. 

The result shows how fast the new variant is weighing on the mood of consumers as daily nationwide cases jumped from less than 500 at the beginning of January to over 80,000. The government has reinstated quasi-emergency measures in most parts of the nation to try to contain the latest wave of infections. 

Figures released earlier in the day already showed weaker-than-expected retail sales and production figures in December as fears over a looming omicron surge emerged, taking the shine off a rebound in the economy in the last quarter of 2021.

Read More: Japan Quarterly Output Gain Signals Growth Return Before Omicron

The impact on the jobs market was the biggest cause of concern in the sentiment survey, with just over half of respondents saying they expected employment conditions to worsen.

Higher prices for energy and household necessities have also been hitting consumers. Just under 90% of households surveyed said they expected prices to go up, the highest proportion since 2014.

The government is trying to ease the pain for consumers with subsidies to offset rising gasoline prices. 

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