Over 90 Percent of Japanese Expect Prices to Rise Within a Year, a Record High in BOJ Survey

Once inflation expectations lodge in people's heads, central banks can no longer look away. The Bank of Japan's latest household survey shows more than 90% of respondents expect prices to be higher a year from now — the highest reading since the survey began, driven by Iran-related energy costs. The danger is self-fulfillment: households that expect inflation accept price hikes and demand wage increases, firms pass on costs more boldly, and inflation entrenches. That raises pressure on the BOJ to keep normalizing rates, with knock-on effects for the yen and mortgage costs. Notably, this data landed the same week Tokyo stocks plunged — markets are pricing exactly this inflation-to-rates-to-valuations chain. Watch BOJ commentary for the phrase 'second-round effects.'