Trends in Prices

    In 1998, domestic wholesale prices were weak, falling 1.5% from the previous year, reversing the 1997 upward trend of 0.6%. (The 1997 rise represented the first rise in six years). Consumer prices (general) rose 2.0% in the January to March period from the same period in the previous year, but then remained stable due to the lessening impact of the consumption tax increase, rising 0.6% from the previous year. When classified into commodity and service group classifications, prices of all classifications other than fresh agricultural and aquatic products contributed to price stability (Fig. 16).

Trends in Workers' Household Expenditures

    Workers' household income in 1998 fell 1.1% nominally from the previous year, and fell 1.8% in real terms due to a significant decline in the income of the head of household. These declines were the largest ever since this study was initiated. In addition, disposable income fell 0.2% nominally from the previous year, marking the first decline since this study was initiated.
    In addition to the decline in household income, the average propensity to consume declined by 0.7% point from the previous year to 71.3%, marking the lowest level recorded since this study was initiated. Consumption expenditures declined 1.1% nominally from the previous year, the largest such drop since this study was initiated. In addition, they also remained in a downtrend in real terms, declining 1.8% for the second largest drop after that occurring during the first oil crisis (Fig. 17). Generally, when real disposable income falls, the consumption level does not drop immediately, so the average propensity to consume tends to rise. However, consumer attitudes chilled against the backdrop of unease about employment (reflecting the severe employment and unemployment situation), a worsening earnings environment, and a heightened sense of unease about the future. As a result, the average propensity to consume fell significantly in 1998 despite the drop in real disposable income (Fig. 18).
    Among people in their thirties and forties, the average propensity to consume fell drastically as this group felt the full impact of unease about employment and future prospects. As a result, real consumption expenditures by this group dropped significantly (Fig. 19).