MNI BRIEF: Household 5-Yr Inflation Expectations Hold At 5% - BOJ

The Bank of Japan's closely watched household median inflation five-year forecast stood unchanged at 5% over Q1, but the number of households expecting prices to rise increased to 80.6% from 76.5%, the BOJ's quarterly consumer survey released Friday showed.

The household median inflation view a year ahead stood at 5%, down from 8% three months ago, indicating inflation expectations may have peaked, increasing concern over the sustainable rise of CPI - a key BOJ focus.

But the households’ price view five years ahead remained above 2%, inline with the corporate price view found in the recent Tankan survey.

BOJ officials are focused on whether expectations held by market players and economists, which is around 1.2%, will rise to 2% to ascertain the strength of the underlying inflation trend.

The survey showed the number of households that expected circumstances to worsen from three months ago fell to 49.5% from 56.2% in December, with rising prices the major driver.

MNI reported this week strong corporate price rises around October on the back of solid wage growth will spur the BOJ to consider raising its policy rates later this year. (See MNI POLICY: Oct Price Revisions Key To Further Rate Hikes)