Japan households expect prices to keep rising, survey shows

The ratio of households who expect prices to rise a year from now stood at 86.0%, a Bank of Japan survey for December showed, compared with 88.0% three months earlier.

On average, households expect prices to rise 11.6% a year from now, compared with 11.9% in the September survey, a sign rising living costs are keeping household inflation expectations elevated.

In the quarterly survey, 83.0% of households expect prices to rise five years from now, lower than 84.8% in the previous poll.

The BOJ abandoned a decade-long, massive stimulus in 2024 and raised interest rates, including to 0.75% from 0.5% in December, on a growing conviction that solid wage gains would keep inflation around its 2% inflation target.

While the central bank is widely expected to keep rates steady this week, some policymakers see scope to raise rates sooner than markets expect as the decline in the yen risks broadening inflationary pressure, sources have told Reuters.

Annual core consumer inflation hit 3.0% in November, exceeding the BOJ's 2% target for nearly four years. The price of food, excluding volatile prices of fresh food like vegetables, rose 7.0% in November from a year earlier, in a sign of the pain inflation is inflicting on households.