TOKYO, Dec 25 (Reuters) - Japan’s savings rate fell to a record low of 2.2 percent in the year that ended in March, government data showed on Thursday, signalling a deterioration in household finances.
The savings rate fell sharply from revised 4.0 percent in the previous year as households saw their incomes fall while they paid more on taxes and social security, according to the Economic and Social Research Institute (ESRI), the Cabinet Office’s research arm.
The outlook for personal savings is uncertain, the ESRI said, as households may cut down on spending as they brace for a lengthy recession amid the economic gloom.
Japan’s overall household spending fell 3.8 percent in October, marking an eighth straight month of year-on-year declines, government data showed last month. The data for November is due out on Friday.
Although Japan’s savings rate was still higher than that of the United States, which stood at 0.6 percent in calendar 2007, it has been in a downward trend since hitting a peak of 18 percent in 1981, according to the ESRI.
The main reason for the long-term decline is that more people are living off their savings as the population ages, said Hiroki Owaki, director of the Department of National Accounts at ESRI. (Reporting by Yuzo Saeki; Editing by Chris Gallagher)