TOKYO, Oct 10 Reuters Nearly 86 of Japanese households expect prices to rise a year from now, a quarterly survey showed on Thursday, a sign of heightening inflation expectations that could help the central bank make the case for additional interest rate hikes.

The ratio of households that expect prices to rise a year from now stood at 85.6 in September, down from 87.5 in the previous survey taken three months ago, a survey by the Bank of Japan BOJ showed.

Of the total households surveyed, 83.6 said they expect prices to rise five years from now, up from 82.0 in the previous survey in June.

In a sign of the pain of rising living costs, food and daily necessities topped the list of items the respondents said they increased spending on compared with a year ago.

Dineouts, clothing and travel were the top three items households reduced spending for compared with a year before, the survey showed.

The BOJ ended negative interest rates in March and raised shortterm borrowing costs to 0.25 on the view Japan was making progress towards durably achieving its 2 inflation target.

Japan39;s core consumer inflation hit 2.8 in August, exceeding the BOJ39;s 2 target for well over two years, keeping alive expectations for further interest rate hikes.

Reporting by Leika Kihara and Takahiko Wada; Editing by Jamie Freed and Sam Holmes

Source Reuters