Stable Japanese household inflation anticipations, on the right track to achieve the objective of the Banque of Japan

Japanese household inflation anticipations remained stable in the three months ending in June, according to a survey published Monday by the Banque du Japan (BOJ), a sign that the country is increasing towards the sustainable inflation objective of 2 % set by the Central Bank.

While this survey is added to the growing evidence that Japanese companies abandon their traditional reluctance to increase prices. Therefore, persistent uncertainty around US trade policy should however encourage BOJ to maintain its interest rates unchanged in the near future, analysts say.

According to the June survey, 85.1 % of households expect a price increase in a year, compared to 86.7 % three months ago.

Among all the households interviewed between May 1 and June 3, 83.1 % anticipate an increase in prices in five years, a figure slightly decreased compared to 83.5 % in stable japanese household inflation anticipations, March.

Households provide an average price increase of 12.8 % in a year, compared to 12.2 % in March, reaching their highest level since September 2006, according to the survey.

These figures highlight the evolution of the perception of the Japanese public. long used to deflation, while companies continue to repercuss the increase in raw material costs by price increases.

The BOJ put an end to a decade of massive recovery policy last year and noted its interest rates at 0.5 % in January, believing that Japan was about to achieve its inflation objective of 2 % permanently.

Although consumption inflation has remained above the target of 2 % of the BOJ for three years. the central bank estimates that underlying inflation-that is to say the price movements supported by the force of domestic demand and solid growth of wages-should be close to 2 % before considering new rate increases.

stable japanese household inflation anticipations, BOJ also indicated that household inflation anticipations were among the main indicators taken into account to determine whether the. underlying inflation is on the right track to reach 2 %permanently.

According to sources cited by Reuters. the Boj is considering this month to revise its inflation forecast for the current exercise, due to the persistent increase in the price of rice and food in general.