Prices up, expenditure up, confidence in the economy up, slightly - BOJ survey

Nearly half of residents in Japan feel economic conditions have worsened compared to a year ago, but confidence is building that things will improve, according to a Bank of Japan survey.

According to the latest edition of the Bank of Japan (BOJ) Opinion Survey on the General Public's Views and Behavior, 49.6 percent of respondents said that they had the impression that economic conditions have worsened compared to just 13.7 percent who said that things have improved. Despite the imbalance, the numbers represent an overall sense of improvement among the public compared similar surveys in March and December when over 60 percent of respondents said they felt that conditions had worsened. 

Confidence in economic conditions improving over the next year is also building, with 16.6 percent of respondents under the impression that things will improve, up from 9.1 percent and 13.1 percent in December and March respectively. 

Income levels were cited as the most common factor influencing the impression of economic conditions, followed by media reports, business performance at work, and the bustle of shopping streets and dining establishments. 

Wages in Japan appear to have received a boost in 2023 with Japanese firms having offered the biggest pay hikes in around three decades following this year’s negotiations with labor unions. According to figures released by the Japanese Trade Union Confederation (RENGO) in July, negotiations resulted in an average pay hike of 3.58 percent, or 10,560 yen per month, the highest since 1993.

RENGO described the hikes as a “turning point.”

With the effect of the hikes perhaps yet to be felt however, any increase in wages didn’t stop 56.8 percent of BOJ survey respondents feeling that they have become worse off in their household circumstances compared to a year ago, up 0.8 points from the previous survey in March. 

Household expenditure has also increased with 59.4 percent of respondents saying they were spending more compared to a year ago.

Any efforts to bring household expenditure down in 2023 will likely be hampered by continuing price hikes on daily-use items in Japan. The results of a survey published in June showed that over 29,000 food and beverage items are already set for price hikes this year. This is expected to increase to around 35,000 items, according to the survey carried out by credit research firm Teikoku Databank Ltd. 

It perhaps comes as little surprise then that low prices will be the top priority for households when choosing goods and services to spend their money on in the year ahead, according to the BOJ survey.  

Low prices was selected by 58.8 percent of respondents compared to durability (43.3 percent), safety (41.9 percent) and reliability (40.5 percent). Environmental and social friendliness came out as the least important factor, selected by 9.1 percent of respondents. 

Even less of a surprise is that public sentiment toward price hikes is not warm, with 86 percent of respondents saying that they feel the current price rise is “rather unfavorable.”

The BOJ’s Opinion Survey on the General Public's Views and Behavior Survey has been conducted since 1993 as a way for the bank to gauge the attitudes and concerns of the public toward its policy and operations. 

According to the latest survey, 23.2 percent of respondents had never heard of the bank’s objective to achieve price stability. The BOJ is currently trying to reach a goal of 2 percent stable inflation. 

The survey was carried out from May 11 to June 6, targeting people living in Japan at least 20 years of age, and received 2,110 valid responses.