The Wall Street Journal is reporting that it appears inflation expectations are on the rise in Japan.

  • Economists say some of the more interesting indications of a change in expectations come from surveys that track spending, showing more consumers may be feeling better about an economic pickup, which could bring higher prices.
  • household spending rose 2.4% on year in January, from a 0.7% fall in December,
  • much of the spending was on optional items rather than essentials, indicating that consumers may be feeling a little richer, according to SMBC Nikko Securities economist Koya Miyamae.
  • The Japan Department Store Association notes … While nationwide sales rose just 0.2% on year in January, sales of luxury items like watches and jewels were up 6.8%, “amid expectations for an upturn and a change in consumer sentiment with the yen weakening and stocks rising since the year’s end.”

Looks like a promising first step towards the 2% inflation target.

Inflation Expectations May Be Rising in Japan (gated)