Japanese households expecting higher inflation hit 14-year high

TOKYO, April 7 (Reuters) – The proportion of Japanese households expecting prices to rise in a year hit its highest level in 14 years, a central bank survey showed on Thursday, as inflationary pressures from rising raw material costs were accelerating.

The quarterly survey also showed more households feeling worse off than three months ago as prices for food and basic necessities rose, underscoring the pain global commodity inflation was inflicting. to the fragile Japanese economy.

Among households surveyed, 84.3% expect prices to rise in a year, up from 78.8% three months ago and marking the highest percentage since June 2008, according to the Bank’s survey from Japan.

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The survey, conducted between February 4 and March 2, also showed that 82.1% of households expect prices to rise in five years. That was up from 80.8% in the previous survey in January and the highest ratio since December 2019.

A Diffusion Index measuring household livelihoods deteriorated to minus 36.9 in March from minus 34.2 in December, with many of those polled blaming the pinch on rising grocery prices.

Japan has not been immune to soaring fuel and commodity prices, with wholesale inflation hitting record highs. Analysts also expect consumer inflation to reach or even exceed the BOJ’s 2% inflation target as early as this month.

Unlike central banks in other advanced economies that are raising interest rates to ease inflationary pressures, the BOJ has little wiggle room as the Japanese economy is still struggling to recover from a pandemic-induced meltdown.

The survey is among data the BOJ will likely analyze at this month’s policy meeting to see if rising commodity and fuel costs have affected the public’s perception of future price moves, and how that could affect consumer spending. Read more

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Reporting by Leika Kihara; Editing by Kim Coghill and Sam Holmes

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