Asia

Monday, July 1, 2019 - 22:01

MNI DATA IMPACT: BOJ Tankan: Biz Mid-Term CPI Outlook Down


TOKYO (MNI) - Japanese companies are anticipating lower inflation in the medium term while maintaining the same short and long term expectations as they did three months ago, according to the Bank of Japan's quarterly Tankan survey for June.

The inflation outlook follows Monday's main Tankan release, and suggests that a pickup in consumer prices will remain slow.

The Tankan showed that business sentiment, particularly among manufacturers, fell broadly from three months ago as sentiment was hit by China's slowing economy and the intensified trade tensions.

The survey also showed capital investment plans by both large and small firms in this fiscal year were above historical averages, easing BOJ concern that the cycle from profits to business spending will stall.

The survey, published Monday, was conducted from May 28 to June 28.

The key points from the inflation outlook section of the Tankan follow.

--In the June survey, companies saw a slightly slower pace of increase in consumer prices over the next three years, while leaving their inflation forecasts for one and five years ahead unchanged.

--Firms on average expect an annual consumer inflation rate of 0.9% a year from now, which is unchanged from March. Companies also expect a 1.1% rise over five years, also unchanged from March. But the June survey showed they expect three year inflation to reach 1.0% in June, down from 1.1% in March.

--The survey results should prompt the BOJ board to maintain the current view that inflation expectations are largely unchanged.

--Many companies -- 31% of those polled vs 32% in March -- expect the inflation rate to be at 1% in 12 months. The survey showed that 14% of all firms (13% previously) projected 2% inflation a year ahead while 32% (32% three months earlier) saw a flat inflation rate during the same period.

--Smaller firms continued to project higher inflation expectations than larger corporations, as they tend to be hit harder by rising costs and the tighter labor supply.

--The survey showed companies on average expect sales prices to rise 0.7% a year from now, down from 0.8% in March. They saw an increase of 1.2% three years ahead, unchanged from March and left their five-year sales price forecast at 1.5%.

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com
--MNI Sydney Bureau; +61 405322399; email: lachlan.colquhoun.ext@marketnews.com

[TOPICS: MAJDS$,M$A$$$,M$J$$$]

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