Japanese consumer inflation expectations hit record high in March – survey

Women wearing protective masks walk in a shopping district in Tokyo
FILE PHOTO: Women wearing protective masks walk at a shopping district amid the coronavirus disease (COVID-19) pandemic in Tokyo, Japan February 15, 2022. REUTERS/Kim Kyung-Hoon

March 16, 2022

TOKYO (Reuters) – Japanese consumers’ inflation expectations hit a record high in March, a government poll showed on Wednesday, as people’s perceptions of future price movements were affected by rising energy and food costs blamed on the Ukraine crisis.

While higher inflation expectations could help the Bank of Japan (BOJ) meet its elusive 2% price target, analysts say rising commodity costs could cool consumption and the broader economy if not accompanied by wage increases.

Consumer one-year inflation expectations rose to 2.67% in March, up from 2.43% in February, the highest level since 2014 when comparable data became available, the survey showed.

15.5% of the total said they expect prices to rise about 3% per year from now on, up from 13.7% in February and the highest since 2019, according to the survey.

The survey was conducted between March 3rd and 7th.

The BOJ’s years of money-printing has failed to boost inflation to its 2% target as weak consumption has kept companies from raising prices for fear of scaring off buyers.

However, with wholesale inflation hitting a four-decade high, more and more businesses are passing the cost on to households. Analysts expect core consumer inflation, now hovering around zero, to get closer to the BOJ’s 2% target from April, partly due to rising energy costs.

Inflation expectation surveys are among the factors the BOJ looks at when setting monetary policy. But BOJ officials have stressed the bank’s determination to keep policy ultra-loose unless rising inflation is accompanied by steady wage increases.

The BOJ will keep monetary policy ultra-loose on Friday and warn of increasing economic risks from the Ukraine crisis, unperturbed by prospects of rising inflation and expected US interest rate hikes.

(Reporting by Leika Kihara; Editing by Simon Cameron-Moore) Japanese consumer inflation expectations hit record high in March – survey


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