— Adds Inflation Expectations At Bottom
— Japan Oct Consumer Confidence Index 40.9 Vs Sep 41.2
— Japan Govt Repeats View: Consumer Confidence Nearly Flat

TOKYO (MNI) – Japan’s Consumer Confidence Survey index stood at
40.9 in October, down from 41.2 in September, posting the 4th
consecutive monthly drop, as people still thought it was not the right
time to buy durable goods, the Cabinet Office said on Wednesday.

Concerns about job security and wage growth eased slightly in the
October survey, although business sentiment in general has been hit by
the appreciation of the yen, which hurts exporter profits.

The October index was the lowest since March, when the index was at
40.9.

The recent drops may be due in part to the government ending its
program of subsidies for purchases of fuel efficient vehicles in
September.

The Cabinet Office repeated its assessment from last month after
downgrading it for two months in a row, saying, “Consumer confidence is
nearly flat.”

In the October survey, two of the four sub-indexes — those on
overall economic well-being and willingness to buy durable goods —
worsened from the previous month.

The sub-index on income growth was unchanged while that for
employment conditions showed its first rise in three months.

The index showing sentiment on asset values, which is not included
in the overall consumer confidence index, stood at 38.1 in October, up
from 37.9 in September, posting the first rise since April.

The 0.3-point m/m decline in the October index followed the
1.2-point fall in September.

Compared with a year earlier, the overall index was still up 0.4
point in October, marking the 18th consecutive year-on-year rise, after
gaining 0.7 point in September.

The latest survey was conducted on Oct. 15, covering 6,720
households, of which 5,038 responded.

The survey also showed that consumer inflation expectations
remained relatively stable in October.

The percentage of people forecasting higher prices in a year’s time
showed the first rise in three months, accounting for 44.2% of the
total, up from 43.7% This compared with the record low of 29.2% marked
in December 2009.

Meanwhile, the percentage of people expecting lower prices 12
months ahead was unchanged at 13.1% after rising for three months in a
row. This compared with the record high of 31.9% hit in December 2009.
The record low for those expecting price drops was 2.4% marked in July
2008, when crude oil prices hit all-time highs.

In October, those projecting inflation below 2% accounted for 23.6%
of the total, up from 22.2% in the previous month.

The survey showed that 15.1% of those polled forecast an annual
inflation rate between 2% and 5% in a year’s time, little changed from
15.2% in the previous month.

Only 5.5% of those surveyed in October forecast prices will rise 5%
or over, down from 6.3% in September.

The percentage of people who projected unchanged prices rose to
33.6% in September form 33.4%, marking the first rise in four months.

Of the total surveyed, 8.4% of people said they projected a price
drop of less than 2% in October, down from 8.8% in September. Those
projecting a price decline of 2% to 5% stood at 3.4%, down from 3.7%.

skodama@marketnews.com
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