Japan's households have experienced a decline in spending for the second consecutive month due to the impact of rising inflation on consumer behavior.

The Ministry of Internal Affairs reported that household outlays in September decreased by 1.1% compared to the previous year, which was slightly better than the expected 1.8% decline. This follows a 1.9% drop in August. This trend suggests that consumers are being cautious in light of ongoing price increases, as household expenditures have only increased twice in the past year.

These findings support the argument for the Bank of Japan to maintain a cautious approach towards potential interest rate hikes, given the persisting economic pressures.