A record 88.9 percent of consumers expect inflation to continue to rise this year as food and gasoline prices show no sign of declining, a Bank of Japan survey showed.
The consumers surveyed from May 15 to June 10 said they expect prices to climb this year, the BOJ said in a quarterly report Friday. The level is the highest since the central bank started questioning people about inflation in 1997.
Japanese consumers, accustomed to falling prices during the nation's decade-long bout with deflation, are cutting back spending to deal with the increases in prices of daily goods ranging from instant noodles to milk.
Household spending fell at the fastest pace since September 2006 in May, when inflation surged to a decade high.