Business and household prospects diverging

The preliminary estimate of Q2 GDP only added to the uncertainty about the planned consumption tax hikes. The latest monthly data have mostly been favourable, notably the buoyancy of business confidence and signs that investment may already have started to recover. The weak yen, while not directly improving the competitiveness of exports, has at least boosted corporate profitability. However, consumer spending is losing momentum. Many commentators are still heralding the return of inflation as a triumph for “Abenomics”, but most households are worse off as a result.