Nearly 90 of households expect prices to rise a year from now
Ratio of respondents seeing price hikes 5 year ahead rises
Rising inflation expectations may help BOJ justify rate hike

TOKYO, July 12 Reuters Nearly 90 of Japanese households expect prices to rise a year from now, a quarterly central bank survey showed on Friday, a sign of heightening inflation expectations that could help make the case for a nearterm interest rate hike.

But households were more pessimistic about current economic conditions compared with three months before, boding ill for the outlook on consumption.

Of the total households surveyed by the Bank of Japan BOJ, 87.5 said they expect prices to rise a year from now, up from 83.3 in previous survey in March and marking the highest level in 16 years.

The survey also showed 82.0 of the respondents expect prices to rise five years from now, higher than 80.6 in the previous survey.

Households39; perception about future inflation is among key factors the BOJ scrutinises in deciding when to raise interest rates, as well as the outlook for consumption and wages.

Companies39; longterm inflation expectations are also converging towards the BOJ39;s 2 target. A separate survey earlier this month showed Japanese firms expect inflation to hit 2.3 three years from now and 2.2 five years ahead.

The surveys back up the BOJ39;s view that Japan is making progress toward durably achieving its 2 inflation target a prerequisite for raising interest rates….