Bank of Japan Governor Haruhiko Kuroda said on Wednesday that consumer inflation was expected to gradually accelerate on rising energy costs and an expected increase in demand driven by a moderate economic recovery.
"Japan's economy is picking up as a trend, although it remains in a severe state due to the impact of the coronavirus pandemic," Kuroda said in a speech to a quarterly meeting of the central bank's regional branch managers.
Japan households' inflation expectations hit more than 2-year high
Japanese households' inflation expectations have risen to a more than two-year high, a quarterly survey showed on Tuesday, a sign the rising cost of living was starting to change public perceptions about future price moves.
The result offers some hope for the Bank of Japan's effort to push inflation to its 2% target, partly by changing perceptions about persistent deflation, with aggressive monetary easing.
But analysts doubt whether recent increases in inflation, driven largely by rising fuel and raw material costs, could be sustained unless accompanied by higher wages.
The percentage of households that expect prices to be higher a year from now stood at 78.8%, up from 68.2% in September and hitting the highest level since September 2019, according to the BOJ survey conducted between Nov. 5 and Dec. 1.
Of the total, 80.8% said they expected prices to be higher five years from now, up from 78.1% in the previous survey and marking the highest level since December 2019.
The survey is among the data the BOJ will likely scrutinise at next week's policy meeting to judge whether rising input costs have affected households' inflation expectations.
(Reporting by Leika Kihara; Editing by Chang-Ran Kim)