MNI BRIEF: BOJ Sees Sentiment Boost But Weaker Spending Worry

Bank of Japan officials are upbeat following the consumer sentiment pick-up in government surveys but they are still eyeing whether private consumption will be weighed down by the ongoing high living costs, MNI understands.

However, there are no expectations the consumer recovery will be to derailed anytime soon due to pent-up demand and hope for wage hikes, but an ongoing squeeze on household income, particularly for lower earners, could hit future consumption.

Businesses, particularly services sector, that have raised wages in recent months, look set to again increase prices as the see a capacity for consumers to absorb higher costs. BOJ officials hope that could lead to further wage increases ahead, which, in turn, will help strengthen the wage price spiral and the push to the 2% price target.