A quarterly survey released by the Bank of Japan on Friday showed that Japanese households' inflation expectations slightly increased in the three months to September. This survey will be one of the factors that the Bank of Japan will carefully consider when formulating new inflation forecasts in its policy review on October 30-31.
According to a September survey, 86.8% of Japanese households expect prices to rise in one year, slightly higher than the 86.3% in June.
Japanese households expect inflation to accelerate by an average of 10.7% in one year, up from 10.5% in June.
The proportion of Japanese households expected to see prices rise in five years has increased from 79.0% in June to 80.7% in September.
This survey highlights the pain caused by rising living costs such as fuel and food, and the tension between Palestine and Israel has once again cast a shadow over oil supply, which may further push up fuel costs.
Household inflation expectations are one of the factors that the Bank of Japan needs to carefully consider when determining whether inflation can continue to achieve the 2% target in the context of stable wage growth. Sustainable wage growth is a prerequisite for Japan to exit its stimulus plan.