Wage Growth and Consumption Dynamics - Japan's wage growth reached its highest level in 33 years during the 2024 spring labor negotiations, yet consumption recovery lags behind income growth[1] - Approximately 70% of respondents indicated they would increase consumption if their income rises, highlighting the importance of sustained wage growth over one-time bonuses[2] - Despite rising wages, about 40% of households expect their income to remain unchanged over the next five years, reflecting a lack of confidence in future income growth[2] Consumer Behavior and Inflation Expectations - High inflation has suppressed consumer confidence, with many households feeling that price increases outpace wage growth, particularly in essential goods like food[2] - Nearly 20% of respondents expect prices to rise by over 20% in the coming year, with around 50% anticipating increases of more than 10%[2] - The perception of rising prices is negatively correlated with consumer sentiment, leading to increased savings behavior among households[3] Savings Trends and Future Uncertainty - The proportion of individuals feeling their savings are "completely insufficient" rose from 30.1% in 2019 to 35.8% in 2025, indicating growing financial anxiety[3] - The share of savings designated for retirement increased from 46.3% to 53.6%, while "no specific purpose" savings surged from 6.7% to 22.9%[3] - Households with a "precautionary savings" motive exhibit significantly higher savings rates, averaging about 1% more than those without such motives[3] Structural Issues in Consumption - The average consumption propensity has shown a long-term decline, particularly among dual-income households, which now make up about 40% of all households[1] - Factors contributing to the decline in consumption include rising homeownership rates, unstable income expectations, and increasing concerns about retirement[1] - The overall consumption trend remains below pre-pandemic levels, with structural issues in the labor market exacerbating the situation[1]