Japan households expect prices to keep rising: central bank survey

[TOKYO] Most Japanese households expect prices to keep rising for the next few years, a central bank survey showed on Monday (Jan 19).

The survey results reinforce the country’s expectations as the conditions fall into place for further increases in still-low interest rates.

The ratio of households who expect prices to rise a year from now stood at 86 per cent, a Bank of Japan (BOJ) survey for December showed, against 88 per cent three months earlier.

On average, households expect prices to rise 11.6 per cent a year from now, against 11.9 per cent in the September survey, a sign that rising living costs are keeping household inflation expectations elevated.

In the quarterly survey, 83 per cent of households expect prices to rise five years from now, lower than 84.8 per cent in the previous poll.

The BOJ abandoned a decade-long, massive stimulus in 2024 and raised interest rates, from 0.5 per cent to 0.75 per cent in December, on a growing conviction that solid wage gains would keep inflation around its 2 per cent inflation target.

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While the central bank is widely expected to keep rates steady this week, some policymakers believe there is scope to raise the rates sooner than markets expect, as the decline in the yen risks broadening inflationary pressure, said sources.

The annual core consumer inflation hit 3 per cent in November, exceeding the BOJ’s 2 per cent target for nearly four years.

The price of food, excluding volatile prices of fresh foods such as vegetables, rose 7 per cent in November from a year before, a sign of the pain inflation is inflicting on households. REUTERS