Japan Households’ Confidence Marks 8-Year High, Inflation Outlook Up In March

Japanese households’ expectations on inflation and the economy rose in March to show signs of healing from the COVID-19 pandemic, Reuters reported.

• Households expecting prices to rise in a year stood at 62.4% in March from 60% in December, according to results of a survey by the Bank of Japan.
• The diffusion index which measures households’ confidence on the economy a year from now stood at -8.5 in March. This is an improvement from -23.1 in December, and is the highest level since June 2013.
• An earlier BOJ survey showed business confidence improving to pre-pandemic levels in the first quarter on the back of robust global demand.
• Downside risks include a resurgence in infections and weak wage growth, as more households already saw their income shrink and expect to slash spending a year from now.
• Survey results will be taken into consideration when the BOJ conducts a quarterly review of its growth and price forecasts on April 26.