Japanese companies think the country will fall short of its 2% inflation goal, despite a flood of stimulus from the Bank of Japan.
The firms believe inflation will be 1.5% a year from now, before climbing to 1.7% in 2017 and 2019, according to a survey of more than 10,000 companies released Wednesday by the central bank.
The inflation survey is the first of its kind, which makes it difficult to draw any conclusions about the success of Abenomics -- the economics strategy championed by Prime Minister Shinzo Abe that hinges on rising prices.
The idea is that aggressive monetary easing, combined with more government spending, could push up prices and end years of deflation, leading to more robust growth for the world's third largest economy.
Masamichi Adachi, a JPMorgan economist, said the data could prove to be an important signpost for the BoJ as it tries to gauge inflation expectations. But the results are difficult to interpret with regard to Abenomics.
Idachi said that some will see the survey as evidence that the business sector does not believe the 2% goal is realistic. Others will argue that 1.7% is close to 2%, and expectations could rise further.
"At least," he said, "the BoJ can argue that firms do not have a deflation mindset anymore, due to the Bank's efforts."
Should the central bank itself determine that Japan does not have enough momentum to meet its inflation goal, investors should be on lookout for more stimulus to enter the pipeline.
It now seems very likely that China's economy will meet or exceed Beijing's 7.5% growth target for 2013. For President Xi Jinping, still in his first year of office, this is very good news.
At the same time, heading into a pivotal meeting of the Communist Party, the country's policy landscape is unusually unsettled. Clarity on three key items -- local debt, economic reform plans and the Shanghai Free Trade Zone -- would MORECharles Riley - Oct 29, 2013 10:48 PM ET
You paid less for gasoline in April, and that led overall inflation lower for the second month in a row.
The Consumer Price Index, a key measure of inflation, fell 0.4% in April, according to the Labor Department. Compared to a year earlier, prices are up only 1.1%, a level of inflation that's considered rather low.
Falling gas prices were the main driver for the broader decline for the second month in MOREAnnalyn Kurtz - May 16, 2013 8:40 AM ET
The average price for a Thanksgiving dinner fell this year in several states, including Arizona, Indiana, Missouri, Virginia and Wisconsin.
And nationwide, the average price for a dinner for 10 people, rose only 28 cents or 0.6%, the smallest yearly increase since the recession in 2009.
So much for inflation.
It costs about $49.48 to feed a family of 10 with turkey and all the fixings this year, according to an informal survey MOREAnnalyn Kurtz - Nov 19, 2012 9:41 AM ET
Are Americans feeling more miserable than they were four years ago? According to the so-called "misery index," they're not -- a fact that boosts President Obama's chances of winning re-election.
The misery index combines the unemployment rate and the annual inflation rate and has accurately predicted the outcome of nine of the last 12 presidential elections, according to economists at Deutsche Bank.
When it rises, it's considered a sign of a weaker MOREAnnalyn Kurtz - Oct 17, 2012 12:08 PM ET
By now, you have probably heard of the "feud" taking place between Federal Reserve chairman Ben Bernanke and Nobel-prize winning New York Times economic columnist Paul Krugman. And if you haven't, what the heck are you doing reading this blog?
Anyway, here's the lowdown in case you aren't up to speed. Krugman took Bernanke to task in a Sunday NYT magazine piece, criticizing Bernanke for not doing enough to tackle the MOREPaul R. La Monica - Apr 26, 2012 3:27 PM ET
Here's more good news for the recovery: 47 states are predicted to see their economies strengthen over the next six months, according to a report issued by the Philadelphia Fed Tuesday.
Among them, West Virginia has the strongest prospects, likely due to a boost from natural gas drilling in the Marcellus Shale. The state also wasn't hit hard by the housing boom and bust, and has had far fewer government layoffs than other MOREAnnalyn Kurtz - Apr 3, 2012 4:04 PM ET
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