Key facts
- Over 90% of Japanese households expect prices to rise in the next year.
- Nearly half of households expect economic conditions to worsen in the coming year.
- Japan's core consumer price index (CPI) is forecast to have risen 1.6% in June.
- Wholesale inflation in Japan rose 7.1% in June.
- Japan's government will affirm the Bank of Japan's independence in monetary policy.
A Bank of Japan survey indicates that inflationary expectations among Japanese households are broadening, with over 90% anticipating price increases within a year and 86.1% expecting rises in five years. This sentiment is coupled with growing pessimism about economic conditions, as nearly half of households expect them to worsen in the coming year, the highest level since December 2008.
These findings will be a key consideration for the Bank of Japan at its upcoming policy meeting. Separately, Japan's government plans to affirm the central bank's independence in monetary policy decisions within its economic blueprint, aiming to prevent market speculation about political pressure on rate hikes. A decision on potential consumption tax cuts is expected by early August.
Meanwhile, Japan's core consumer inflation likely picked up in June from the previous month, with a Reuters poll forecasting a 1.6% rise year-on-year. This increase is attributed to elevated energy prices, linked to the Middle East conflict, and technical factors such as revisions to medical service fees. Wholesale inflation also surged 7.1% in June, the fastest rise since March 2023. The CPI data will be announced on July 24.