Japan's household spending likely rose in November for the first time in four months while consumer inflation in Tokyo area is expected to have hit a 22-month-high in December, a Reuters poll showed.
Low coronavirus cases have boosted consumption and the broader economy throughout the last quarter of 2021, but the recent spread of the new Omicron variant and increasing cost of goods have raised some concerns about Japan's recovery this year.
"As new COVID-19 cases remained low, stay-at-home has been easing," economists at SMBC Nikko Securities said. Indeed, a lull in infections is expected to have driven a solid rebound in the world's third-largest economy in the fourth quarter of 2021, after a worse-than-forecast contraction in July-September.The main uncertainty coming into the New Year is the rising number of nationwide coronavirus infections. Community transmission of the more infectious Omicron variant had already started in December, ahead of Japan's holiday season when many travellers return home for the New Year.