MNI BRIEF: BOJ Survey Shows Sentiment Drop, Prices To Rise

High costs of living led 85.7% of respondents in the Bank of Japan's quarterly consumer survey to predict higher prices next year, a modest decline from 87.1% in June's survey, according to data released on Thursday.

Just 2.2% of respondents said prices would fall next year, up from 1.5% three months earlier. The proportion of those expecting little change 12 months ahead rose to 11% from 9.7%. The median CPI forecast stood at 5%, unchanged from 5% in June.

Looking five years ahead, 78.3% said prices would rise, down from 79.8% three months earlier, while 5.5% of respondents expect prices to fall, up from 3.5% in June. Those saying prices would be little changed fell to 13.8% from 14.1%.

The diffusion index that gauges household sentiment on current economic conditions fell 7.7 points to -58.4 in September, with more people saying sentiment had worsened judging from income levels and media reports, the survey showed

The number of people who said household circumstances worsened rose to 50.7% from 43.2%, citing rise in prices as the biggest reason (a record high of 84.5% vs. 78.9% in June).

The consumer sentiment outlook index projecting conditions a year ahead fell for a third consecutive survey, down 3.7 points to -32.4 in September from -28.7 in June.