Service prices, consumption boost optimism – Bank of Japan

The Bank of Japan has highlighted rising service prices and the positive impact of substantial pay hikes from companies on household income. This underscores the bank’s confidence that the economy is moving closer to sustainably achieving its 2% inflation target, Reuters reported on Tuesday.

The Bank of Japan’s full quarterly outlook report indicates that the outcome of this year’s robust wage negotiations will lead to salary increases around summer. Additionally, it emphasises that household spending is expected to gradually rise, further supporting consumption.

According to a composite index created by the Bank of Japan (BOJ), long-term inflation expectations in Japan are increasing to approximately 1.5%. This development contributes to the growing indications of shifts in how households and companies perceive the price outlook.

Last month, the Bank of Japan (BOJ) concluded eight years of negative rates and other unconventional policies. This historic move marks a departure from decades of extensive monetary stimulus aimed at combating deflation and spurring economic growth.