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JAPAN: Massive money printing will help accelerate inflation.

Fewer Japanese households expect prices to rise in coming years compared with three months ago, a Bank of Japan survey showed, suggesting growing scepticism about the bank’s stand that its massive money printing will help accelerate inflation to its 2 percent target.
Households were also less optimistic about the economy than three months ago, the survey showed on Friday, underscoring the fragile nature of Japan’s recovery.
The ratio of households that expect prices to rise a year from now stood at 77.6 percent in December, down from 81.9 percent in September, according to the survey.
The survey also showed the ratio of households projecting prices to rise five years ahead fell to 80.1 percent from 83.7 percent, a sign that slumping energy and commodity prices were hurting inflation expectations.
An index measuring households’ sentiment worsened 2.1 points from September to minus 17.3, the survey showed.
Under a stimulus program deployed in 2013, the BOJ aims to accelerate inflation to 2 percent on hope its massive money printing will change public perceptions that deflation will persist and encourage households to spend now rather than save.
But private consumption remains weak as companies remain reluctant to boost salaries. Wages fell for the first time in five months in November on declining bonus payments, data showed on Friday.
“The marked slowdown in … cash earnings was mostly due to a plunge in volatile bonus payments, whereas regular pay expanded rather solidly,” Marcel Thieliant, senior economist at Capital Economics, wrote in a research note.
“However, much stronger gains in (labor cash) earnings will be needed to reach the BOJ’s 2 percent inflation target.”
Core consumer inflation stood at 0.1 percent in the year to November, underlining Japan’s uphill struggle to foster price growth in the face of tumbling oil prices.
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