Japan's consumer confidence worsened for the second straight month in July, as electricity and energy prices rose due in part to the yen's slide, negatively rippling through the daily life, a government survey showed Friday.
The seasonally adjusted index of sentiment among households made up of two or more people fell 0.7 point from the previous month to 43.6, remaining below 50, the Cabinet Office said. Readings below 50 indicate pessimists outnumber optimists.
The government downgraded its basic assessment of the index for the first time in eight months, saying, "The pace of improvement is slowing." Last month it said consumer confidence "is improving."
The survey also showed that 86.2 percent of households expect consumer prices to increase in the year ahead, up 2.3 percentage points from June and the highest level since September 2008.
The figure suggests that the pledge made by Prime Minister Shinzo Abe's administration and the Bank of Japan to conquer nearly two decades of deflation has boosted inflation expectations, a Cabinet Office official said.
Moreover, the recent depreciation of the yen, triggered by drastic monetary easing by the central bank, has driven up import costs, sparking fears that price hikes of daily necessities will continue, the official added.
In July, three of the index's four components dropped, with near-term willingness to purchase new durable goods decreasing 1.5 points to 44.0.
While consumers' view of employment conditions rose 0.1 point to 47.7, their assessment of livelihood declined 0.8 point to 41.6 and that of income growth dropped 0.6 point to 41.0.
The survey conducted July 15 covered 8,400 households and valid responses were received from 6,310 households.