More than half of Japanese households said their livelihoods have worsened in a Bank of Japan survey, sending a clear signal that the hottest inflation in four decades is eating into people’s confidence.
(Bloomberg) — More than half of Japanese households said their livelihoods have worsened in a Bank of Japan survey, sending a clear signal that the hottest inflation in four decades is eating into people’s confidence.
Some 53% of households said their economic livelihood has worsened compared with a year ago, the highest percentage in almost 13 years, according to the latest quarterly BOJ survey published Wednesday.
Only 3.7% said things have improved, with another 42.4% saying it’s difficult to judge.
The results suggest that as price gains heat up, consumers will be more reluctant to spend more without higher wage growth. That development will make it harder to get to the sort of virtuous economic cycle BOJ Governor Haruhiko Kuroda is seeking.
A record 68.3% of respondents cited inflation as a particularly important factor they will take into account for the upcoming year’s spending plans, according to the survey.
Recent economic data have demonstrated widespread inflation as companies increasingly pass on higher costs to consumers.
Government data this week showed Tokyo’s inflation outpaced forecasts to hit 4% for the first time since 1982 in December, suggesting the underlying price trend is stronger than economists had expected.
Households’ inflation forecast for the next 12 months also doubled to a record 10%, according to the latest BOJ survey. That reflects how seriously people view near-term price acceleration in the world’s third largest economy.
Their longer-term view, which is generally a more important element for monetary policy, remained unchanged at a record high of 5%.
The central bank will conclude its latest policy meeting next week after its surprise decision to widen its 10-year yield target band last month. Traders are likely to remain on high alert for any further action from the BOJ.
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