The five forecasts showed the core consumer price index, which strips out volatile fresh food prices but includes energy and fuel, increasing by an average of 2%.
The economists see broadening price hikes driven by a weaker yen and higher commodity prices amid the war in Ukraine, along with the absence of last spring’s rate cuts by wireless carriers that reduced inflation until last month.
Prices last grew that fast in March 2015 following a consumption tax increase, despite the Bank of Japan’s efforts since then to achieve stable 2% inflation.
Real-time retail data shows a steady rise in prices. The Nikkei CPINow daily price index, based on point-of-sale data, showed prices up 1.6% on the year as of Wednesday. The indicator has stayed above 1% since March.
Three of the economists surveyed see price growth topping out in October, while the other two forecast peaks in August and this month. All five expect inflation to reach the low 2% range.
While the Bank of Japan has reiterated its commitment to monetary easing, it may face more pressure from market players to change course.
Saisuke Sakai of Mizuho Research & Technologies sees inflation peaking at 2.3% in August, with energy prices playing a role. “Electricity rates will rise toward the summer as power companies make fuel cost adjustments,” Sakai said.
Taro Saito of the NLI Research Institute expects price growth to stay around 2% throughout 2022, going as high as 2.3% in October.
“Higher costs from the weak yen will be passed on to consumers more broadly in areas like daily necessities and apparel,” he said.
Full-year inflation for fiscal 2022 is expected to average 2%. The survey assumes an average exchange rate of ¥128 to the dollar, close to recent levels.
Though there are concerns about accelerating inflation dampening consumer spending, price growth is expected to slow back down in fiscal 2023 to 0.9%.
“Wages aren’t rising enough, so households have a low tolerance for price hikes,” said Yoshimasa Maruyama of SMBC Nikko Securities. “Prices won’t increase as much as in Europe or the US.”
Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute sees inflation to peak in October at 2.2%, while Tatsushi Shikano at Mitsubishi UFJ Morgan Stanley Securities expects it to slow down after reaching 2.1% this month.