By Leika Kihara
TOKYO (Reuters) – Nearly 90% of Japanese households expect prices to rise a year from now, a quarterly central bank survey showed on Friday, a sign of heightening inflation expectations that would help make the case for a near-term interest rate hike.
But households were more pessimistic about current economic conditions compared with three months before, boding ill for the outlook of consumption.
Of the total households surveyed by the Bank of Japan (BOJ), 87.5% said they expect prices to rise a year from now, up from 83.3% in previous survey in March.
The survey also showed 82.0% of the respondents expect prices to rise five years from now, higher than 80.6% in the previous survey.
Households’ perception about future inflation is among key factors the BOJ scrutinises in deciding when to raise interest rates, as well as the outlook for consumption and wages.
An index gauging the ratio of households who are optimistic about the economy versus those who are pessimistic stood at -49.8 in June, worse than -36.1% in March, the survey showed.
The BOJ ended negative interest rates and other remnants of its radical stimulus in March. Governor Kazuo Ueda has said the central bank will raise interest rates further if it becomes more convinced that inflation will durably hit its 2% target.
(Reporting by Leika Kihara; Editing by Muralikumar Anantharaman and Christopher Cushing)
