Consumer inflationary expectations stayed near a record as rising prices of daily necessities put pressure on households, according to a Bank of Japan survey released Thursday.
Some 86 percent of consumers surveyed Feb. 8 to March 7 said they expect prices to climb this year, the BOJ said in a quarterly report. Rising prices of daily necessities, including bread and milk, are squeezing consumers, whose average wages fell in 2007 at their fastest pace in three years. Household spending stalled in February, a blow to an economy that relies on consumers for more than half of its gross domestic product.
"The signs of food-price inflation at the consumer level are becoming stronger," Richard Jerram, chief economist at Macquarie Securities Ltd. in Tokyo, said before the survey was published. "The damage to consumers' real spending power should be having some negative impact on activity."
Consumer prices, excluding fresh fish, fruit and vegetables, rose 1 percent in February, the fastest pace in a decade, as companies passed record oil and wheat costs on to households.