Japanese consumer confidence worsened in June for the first time in six months as volatile stock and foreign exchange markets cast a shadow over the outlook for the nation's economy, a government survey showed Wednesday.
The seasonally adjusted index of sentiment among households made up of two or more people fell 1.4 points to 44.3 from the previous month, remaining below 50 with all of the index's four components declining, the Cabinet Office said. Readings below 50 indicate pessimists outnumber optimists.
A Cabinet Office official said the market volatility is "only temporary," brushing aside concern that it could further damage household sentiment, dragging down consumption and the broader economy.
The government left intact its basic assessment of the index, saying despite the latest reading consumer confidence is "improving."
The survey showed that 83.9 percent of households expect consumer prices in the country to rise in the year ahead, up 0.8 point from May and hitting the highest level since October 2008.
The figure suggests the pledge made by Prime Minister Shinzo Abe's administration and the Bank of Japan to beat nearly two decades of deflation has boosted inflation expectations, the official said.
In late May, the 225-Nikkei Stock Average soared more than 80 percent to 15,627.26 from mid-November, when the House of Representatives was dissolved for the general election on Dec. 16 that brought Abe's Liberal Democratic Party back to power.
The Nikkei, however, extended its losses in early June as investors questioned Abe's new economic growth strategy, which analysts say lacks concrete measures to achieve economic revitalization led by the private sector.
In mid-June, the index briefly dived to its lowest level in over two months, slipping below the 12,500 line.
The yen also appreciated against its major counterparts such as the U.S. dollar in early June, raising skepticism about a recovery in exports, a key engine of economic growth.
The appreciation of the yen weighs on exporters by making Japanese products more expensive abroad and decreasing the value of overseas revenue in yen terms.
All of the index's four components fell, with consumers' view of employment conditions declining 2.6 points to 47.6.
Consumers' near-term readiness to purchase new durable goods sank 1.2 points to 45.5, while their assessment of livelihoods was down 1.1 points at 42.4 and that of income growth was down 0.6 point at 41.6.
The survey conducted June 15 covered 8,400 households and valid responses were received from 6,143 households.