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Consumption has been a weak spot in Japan's fragile economic
recovery as wages have yet to rise quickly enough to cushion the
blow to households from rising inflation.
A diffusion index measuring how taxi drivers, restaurants and
other service-sector workers saw economic conditions fell to
49.8 in March, down 1.5 point from February, the survey showed
on Monday.
"While the economy continues to recover moderately as a trend,
the recovery seems to be pausing," the government said.
The diffusion index is the percentage of firms saying they saw
economic conditions as good or improving, minus those saying
conditions were bad or deteriorating.
The BOJ ended eight years of negative interest rates and other
remnants of its unorthodox policy last month, making a historic
shift away from its focus on reflating growth with decades of
massive monetary stimulus.
Governor Kazuo Ueda has signalled the chance of further interest
rate hikes, saying that recent weak signs in consumption and the
broader economy will prove temporary.
But household spending fell 0.5% in February from a year
earlier, the 12th straight month of declines, data showed on
Friday.
Japan's real wages, a barometer of consumers' purchasing power,
fell in February for a 23rd straight month in a sign households
continued to face the pinch from rising living costs.
(Reporting by Leika Kihara; Editing by Kim Coghill)
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