MNI BRIEF: BOJ Sees Gradual Spending Rise, Small Upside Risk

Bank of Japan officials foresee a gradual recovery in private consumption with limited upside risk from increased vaccination rates but they are finding it difficult to predict the pace of the pickup in pent-up demand and its impact on consumer prices, MNI understands.

Bank officials expect higher raw material and energy costs as well as supply restrictions to also boost consumer prices although they rule out sharp hikes.

Growing demand for services such as traveling and eating out could lead consumers to withdraw some of their forced savings, which have grown due to the many restrictions. However, it is uncertain how Japanese consumers, who tend to be more cautious than their U.S. and European counterparts, will spend money amid concerns over yet another hike in the consumption tax.