Japan Pensioners Spend More Despite Inflation

Pensioners are particularly affected by inflation, yet they are also the demographic driving consumption the most, according to a bank poll on the impact of inflation across different generations and income levels in Japan, considering consumption trends, as reported by Yuko Shimada for Mainichi Shimbun.

The figures come despite the indication that inflation damage was generally lower for younger people and increased for older age groups.

Sumitomo Mitsui Trust Bank Ltd., which conducted the survey, views the surprising results as an indication that people on pensions are not necessarily feeling grim about facing financial hardship.

Comparing the year 2020, pre-inflation, with the period from January to October 2023, the Consumer Price Index (CPI) rose by 5.3%.

However, this is an "average" value; price increases vary by product, and the actual impact of inflation on household finances depends on factors such as household structure (whether the person is living alone or with others), as well as the generation and income level.

The bank calculated a hypothetical CPI increase rate, factoring in consumption trends by generation.

The rate of increase was found to be 4.5% for those in their 20s and younger, 5.3% for those in their 30s, 5.2% for consumers in their 40s, 5.3% for those in their 50s, 6.2% for people in their 60s and above, and a 6.9% increase for those living on pensions.

This indicates that inflation damage was generally lower for younger people and increased for older age groups.

The bank then examined how inflation changed spending on consumer goods and services.

A comparison of the change in real expenditure before and after inflation, excluding the effect of price hikes, shows that all generations saw significant declines in consumption of foodstuffs and expendable household supplies, whose prices rose significantly.

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