Japan households expect prices to keep rising, survey shows

By Leika Kihara

TOKYO, Jan ⁠19 (Reuters) - Most ⁠Japanese ‍households expect prices to keep rising for the next few years, a central bank survey showed on ‍Monday, reinforcing expectations the country was seeing conditions fall ​into place for further increases in still-low interest rates.

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.

(Reporting by Takahiko Wada and Leika Kihara; Editing by Christopher Cushing and Kate Mayberry)

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