Consumer confidence tumbled in July to the lowest in six months, raising the risk of weakness in spending that could weigh on the economy this quarter.
An index of confidence dropped to 40.3 from 41.7 in June, according to data released on Monday by the Cabinet Office. A separate survey on the outlook for economic conditions over the next few months fell to the lowest since January.
Bank of Japan officials are assessing the strength of a rebound in the economy from an estimated slump last quarter. Worsening sentiment could damp personal consumption, which has failed to fully recover from a consumption-tax hike last year.
"Households are not up for spending yet," said Shinichiro Kobayashi, an economist at Mitsubishi UFJ Research and Consulting Co.
"They may be concerned about inflation as they see price of daily necessities like food rising while wage growth remains tepid."
Workers felt the biggest drop in monthly earnings since 2009 in June because of changes in the timing of summer bonus payments, government data showed last week.
Consumer prices excluding fresh food and energy rose 0.7 percent in June from a year earlier, the same pace as in May, the Bank of Japan said on Monday.
BOJ Gov. Haruhiko Kuroda said on July 15 that he didn't think "at all" that weakness last quarter would continue. Last week after the central bank kept its unprecedented monetary stimulus policy unchanged, he said that he needed to see "hard" data to determine the strength of spending in July.
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