MNI BRIEF: Households’ 5-Year Inflation Outlook Flat At 5%-BOJ

Japanese households’ median inflation expectations five years ahead stood at 5%, the Bank of Japan’s quarterly consumer survey released Wednesday showed, which is unchanged from the previous quarter. However, the number of households who expect prices to rise rose to 79% from 75.4%

The median expectation a year ahead stood at 10%, also unchanged from three months ago, but the number of households expect price to rise increased to 86.3% from 85.7% in March. Overall, the survey outcome was favorable for BOJ officials focused on how inflation expectations have evolved amid corporate price hikes.

However, there was a modest pick-up in the number of households who saw conditions worse than a year ago, rising to 56.8% from 56.0 last quarter, with many pointing to both higher prices and salaries not keeping pace with the cost of living.

The diffusion index gauging household sentiment on current economic conditions rose 21.2 points to -35.9 in June with more people saying sentiment had improved, helped by a better media background for the economy and improved wages for others. The outlook index projecting conditions a year ahead also rose for the second straight quarter, up 11.4 points to -15.8 in June from -27.2 in March.