Customers shop at a Marusan supermarket in Koshigaya, Saitama Prefecture, Japan, on Sunday, March 16, 2025. - Bloomberg
TOKYO: Japan’s households reduced their collective stash of cash at the fastest pace on record last quarter as they sought to cope with rising costs of living, according to the latest data by the Bank of Japan.
Citizens’ holdings of cash slipped to ¥105.3 trillion (US$707 billion) in the three months ended in December, down 3.4 per cent from a year earlier in the biggest drop in the data going back to 1998, according to a quarterly flow of funds report published Friday by the central bank.
The decline mostly likely reflects the wider adoption of cashless consumption as well as a rise in nominal consumer spending due to inflation, a reversal after the pile of cash grew during the Covid pandemic, the BOJ said at a briefing.
The decline in cash comes as economists have been watching to see if households change their behaviour regarding so-called mattress money, or funds stashed at home. As the economy appears poised to emerge from deflation, money would lose value in real terms if it’s not earning income in investments or in a bank account.
The flow of funds data showed that household assets in investment trusts rose to a record high as more individual investors flocked to the asset. Holdings of Japanese government bonds also jumped at the fastest pace since 2007.
Earlier Friday, a government report showed that Japan’s inflation rose at a faster pace than expected, staying well above BOJ’s two per cent target. Consumer spending on a non-adjusted to inflation basis advanced to a record of ¥332.9 trillion (US$2.23 trillion) last quarter. - Bloomberg
