MNI DATA IMPACT: BOJ Dec Tankan: Biz 1-Yr CPI Outlook Down

--BOJ Dec Tankan: Firms 1-Yr Inflation Rate at 0.8%; 0.9% in Sep 

--BOJ Dec Tankan: Firms 3-Yr Inflation Rate at 1.0%; 1.0% in Sep 

--BOJ Dec Tankan: Firms 5-Yr Inflation Rate at 1.1%; 1.1% in Sep

     TOKYO (MNI) - The one-year inflation outlook among Japanese companies fell

from three months ago, indicating any pickup in consumer prices will remain

muted, the Bank of Japan's December Tankan survey follow-up released Monday

showed.

     The inflation outlook survey follows Friday's main Tankan release, which

showed business sentiment broadly fell from three months ago, hit by trade

frictions and the recent sales tax hike.

     But the survey also showed capital investment plans by major and smaller

firms in this fiscal year were above historical averages, easing BOJ concern

that the virtuous cycle from profits to spending will stall.

     The survey was conducted from Nov. 13 to Dec. 12.

     The key points from the inflation outlook section of the Tankan follow.

     --In the December survey, companies on average saw the pace of increase in

consumer prices for one-year ahead fell from three months ago.

     --Firms on average expect the annual consumer inflation rate at 0.8% a year

from now, down from 0.9% in September. But companies expect a 1.0% rise three

years and a 1.1% rise five years ahead, both unchanged from September.

     --The survey results will prompt the BOJ board to maintain its current view

that inflation expectations are more or less unchanged.

     --Many companies (30% of those polled vs 30% in September) expect the

inflation rate to be about 1% in 12 months. The survey showed that 12% of all

firms (14% previously) projected 2% inflation a year ahead while 36% (34% three

months earlier) saw a flat inflation rate during the same period.

     --Smaller firms continued to project higher inflation than larger

corporations, as they tend to be hit harder by rising costs and a tighter labor

supply.

     --The survey showed companies on average expect sales prices to rise 0.6% a

year from now, unchanged from 0.6% in September. They saw an increase of 1.0%

three years ahead, also unchanged from September but they saw an increase of

1.4% five years sales price, up from 1.3%.

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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