• Reuters

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Companies’ expectations for inflation over the next year have receded slightly after the Bank of Japan conceded it will take some time to reach its inflation target, according to the central bank’s latest tankan survey.

Firms expect consumer prices to have risen 0.8 percent a year from now, slightly below their projection three months ago of a 0.9 percent increase, the survey found.

They expect consumer prices to have risen by an annual 1.1 percent three years from now and 1.1 percent five years ahead, unchanged from three months ago.

“Expectations for the next year will fluctuate based on input prices,” said Norio Miyagawa, senior economist at Mizuho Securities.

“The bigger problem is that expectations for the next three to five years are not moving at all, meaning retail prices will not rise,” he said. “The BOJ is stuck in a long battle to achieve its inflation target.”

The bank kept policy steady at a meeting in September after taking steps in July to make its monetary framework more sustainable, such as allowing bond yields to move in a larger range around its zero percent target.

BOJ Gov. Haruhiko Kuroda said the Policy Board made this decision in response to fears over the side effects of its prolonged easing.

He has since acknowledged that inflation is taking longer than expected to accelerate.

The Policy Board has been divided between those who fret over the rising impacts of prolonged easing, such as low bond market liquidity, and those who insist the BOJ should do more to drive inflation toward the 2 percent target.

The nationwide core consumer price index, which includes oil products but excludes volatile fresh food costs, rose a modest 0.9 percent in August from a year earlier, remaining distant from the bank’s objective.

The BOJ data on corporate price expectations was released Tuesday, after a release Monday based on the tankan showed that rising raw material costs and the string of natural disasters disrupted production and sent business confidence at the nation’s big manufacturers to its lowest in more than a year.

The BOJ’s next Policy Board meeting ends Oct. 31.

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