More than 70 percent of the public expects prices to be higher a year from now, a quarterly survey carried out by the Bank of Japan said Monday.
According to the survey, 74.2 percent of the respondents said prices will rise either considerably or slightly a year from now. Asked by how much, the median forecast was 3.0 percent, up from 1.0 percent from the December survey, the central bank said.
In the quarter to March, consumer sentiment rose for the first time in three quarters as the diffusion index surged 28 points to minus 22.6, its highest since June 2007, the central bank said.
Stocks have risen sharply since Prime Minister Shinzo Abe began bludgeoning the yen with deflation-fighting talk heavy on quantitative easing and fiscal spending for temporary growth. While the BOJ has set a 2 percent inflation target to end the nation's deflationary woes, legislation on structural reforms needed to produce real sustained economic growth is nowhere to be seen in Abe's policies.
The diffusion index is calculated by subtracting the portion of people who feel current conditions are worse than a year ago from those who feel conditions have improved.
The diffusion index of consumer sentiment on economic conditions in the coming year has soared to an all-time high since the bank began the survey in March 1996, hitting 6.8, up 39.9 points from the previous survey.
The BOJ's latest survey was conducted between Feb. 7 and March 6 on 4,000 people 20 or older and received valid responses from 2,347, or 58.7 percent.