Japan and the United States: Price Developments · 12/6 12/9 12/12 13/3 13/6 13/9 13/12 14/3 14/6 14/9 14/12 15/3 15/6 15/9 Prices Income, bottom third Income, top third All y/y %

Chart 1

Japan and the United States: Price Developments

(1) Japan

(2) United States

Note: Figures for Japan exclude the direct effects of the consumption tax hike after April 2014. Sources: Ministry of Internal Affairs and Communications; Bank of Japan; U.S. Bureau of Economic Analysis.

-3

-2

-1

0

1

2

3

4

5

2005 06 07 08 09 10 11 12 13 14 15

CPI (less fresh food and energy)

CPI (less fresh food; core CPI)

CPI (headline)

y/y % chg.

CY

-3

-2

-1

0

1

2

3

4

5

05 06 07 08 09 10 11 12 13 14 15

PCE (headline)

PCE (core)

y/y % chg.

CY 2005

Chart 2

Japan and the United States: Long-Term Inflation Expectations

(1) Japan

(2) United States

Sources: Consensus Economics Inc., "Consensus Forecasts"; Ministry of Internal Affairs and Communications; Bloomberg.

-4

-3

-2

-1

0

1

2

3

4

5

89 93 97 01 05 09 13

Economists (Consensus Forecasts)

CPI (headline)Inflation expectations (one year ahead)Inflation expectations (five years ahead)

CY 1989

y/y % chg.

-4

-3

-2

-1

0

1

2

3

4

5

95 99 03 07 11 15

y/y % chg.

Economists (Consensus Forecasts)

PCE (headline)

Inflation expectations (one year ahead)

Inflation expectations (five years ahead)

CY 1995 -4

-3

-2

-1

0

1

2

3

4

5

05 07 09 11 13

Inflation swap rate

Implied five-yearforward rate, fiveyears ahead

%

2005/12

-4

-3

-2

-1

0

1

2

3

4

5

07 09 11 13 15

Inflation swap rate

Implied five-yearforward rate, fiveyears ahead

CY 2007

%

Chart 3

Japan and the United States: Households' Short- and Long-Term Inflation Expectations (Median)

Sources: Bank of Japan; University of Michigan, "Surveys of Consumers."

-4

-2

0

2

4

6

8

10

12

06/6 07/6 08/6 09/6 10/6 11/6 12/6 13/6 14/6 15/6

y/y % chg. Japan

Five years ahead

One year ahead

2006/6

-4

-2

0

2

4

6

8

10

12

05/1 06/1 07/1 08/1 09/1 10/1 11/1 12/1 13/1 14/1 15/1

y/y % chg.United States

Over the next five to ten years

Over the next year

2005/1

Chart 4

Japan: Households' Present Perceived Inflation (Median)

Notes: 1. Present perceived inflation is defined as present perceived price changes relative to one year ago.

2. Figures for the headline CPI exclude the direct effects of the consumption tax hike after April 2014. Sources: Ministry of Internal Affairs and Communications; Bank of Japan.

-4

-2

0

2

4

6

8

10

12

06/6 07/6 08/6 09/6 10/6 11/6 12/6 13/6 14/6 15/6

y/y % chg.

Headline CPI

Present perceived inflation

2006/6

Chart 5

Japan and the United States: Households' DIs on Income and Prices

Notes: 1. Income DI = "will increase" - "will decrease." 2. Price DI = "will increase" - "will decrease."

Notes: 1. Income DI = "expect increase" - "expect down." 2. Price DI = "will go up" - "down."

Sources: Bank of Japan; University of Michigan, "Surveys of Consumers."

-60

-40

-20

0

20

40

60

80

100

06/6 07/6 08/6 09/6 10/6 11/6 12/6 13/6 14/6 15/6

% pointsJapan (one year ahead)

Income DI

Price DI

2006/6

-60

-40

-20

0

20

40

60

80

100

05/1 06/1 07/1 08/1 09/1 10/1 11/1 12/1 13/1 14/1 15/1

% pointsUnited States (over the next year)

Price DI

Income DI

2005/1

Chart 6

United States: Households' Expected Changes in Income over the Next Year (Median)

Source: University of Michigan, "Surveys of Consumers."

Chart 7

United States: Households' Expected Changes in Income and Prices by Income Group over the Next Year (Median)


0.0

1.0

2.0

3.0

4.0

5.0

12/6 12/9 12/12 13/3 13/6 13/9 13/12 14/3 14/6 14/9 14/12 15/3 15/6 15/9

Household income

Income, bottom thirdIncome, top thirdAll

y/y % chg., three-month moving average

2012/6

0.0

1.0

2.0

3.0

4.0

5.0

12/6 12/9 12/12 13/3 13/6 13/9 13/12 14/3 14/6 14/9 14/12 15/3 15/6 15/9

Prices

Income, bottom thirdIncome, top thirdAll

y/y % chg., three-month moving average

2012/6

0.0

1.0

2.0

3.0

4.0

5.0

05/1 06/1 07/1 08/1 09/1 10/1 11/1 12/1 13/1 14/1 15/1

y/y % chg.

Monthly data

Three-month moving average

2005/1

Chart 8

United States: Households' Probability Expectations on Real Income Gains over the Next Five Years


Chart 9

Japan: DIs on Households' Tolerance to Price Rises and Present Perceived Inflation

Notes: 1. Price rise tolerance DI = ("price rise is rather favorable" and "price decline is rather unfavorable" respondent ratio - "price rise is rather unfavorable" and "price decline is rather favorable" respondent ratio) / (valid respondent ratio - "have remained almost unchanged" respondent ratio).

2. Perception DI of present price levels = ("have gone up significantly" × 1 + "have gone up slightly" × 0.5) - ("have gone down slightly" × 0.5 + "have gone down significantly" × 1).

Sources: Ministry of Internal Affairs and Communications; Bank of Japan.

-20

-10

0

10

20

30

40

50

60

70

80

-100

-90

-80

-70

-60

-50

-40

-30

-20

-10

0

06/6 07/6 08/6 09/6 10/6 11/6 12/6 13/6 14/6 15/6

% points% points

Price rise tolerance DI (left scale)

Perception DI of present price levels (right scale)

2006/6

25

30

35

40

45

50

05/1 06/1 07/1 08/1 09/1 10/1 11/1 12/1 13/1 14/1 15/1

mean probability, %

Monthly data

Three-month moving average

2005/1

Chart 10

Japan: Firms' Sales Price Expectations

Notes: 1. Sales price forecast DI = "will rise" - "will fall." 2. The Tankan explicitly asks respondents to disregard the effects of the consumption tax hike.

Source: Bank of Japan.

-40

-30

-20

-10

0

10

20

05/3 06/3 07/3 08/3 09/3 10/3 11/3 12/3 13/3 14/3 15/3

％ pointsFirms' sales price forecast DI (three months ahead)

2005/3

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

14/3 14/6 14/9 14/12 15/3 15/6 15/9

Firms' outlook for sales prices (one year ahead)

% chg. from the current level

2014/3

Chart 11

Inflation Targets and Definitions

Source: Each central bank.

Inflation target Introduction year Reference indicator Numerical valueDuration to achievethe target

Target variability

United States Longer-run goal 2012 Headline PCE 2% Long term Fixed

Euro areaDefinition of pricestability

1998 Headline HICP Below but close to 2% Medium term Fixed

Japan Price stability target 2013 Headline CPI 2%Medium tolong term

Fixed

United Kingdom Inflation target 1992 Headline CPI 2% Reasonable time Fixed

Australia Inflation target 1993 Headline CPI 2-3% Medium term Fixed

New Zealand Inflation target 1988 Headline CPI1-3% (with a focus on 2%target midpoint)

Medium term Fixed

South Korea Inflation target 1998 Headline CPI 2.5-3.5% for 2013-15 Pre-fixed termAdjusted everyfew years

Indonesia Inflation target 2000 Headline CPI4.5% ± 1% for 2012-14 and4% ± 1% for 2015

Pre-fixed termAdjusted everyfew years

Thailand Inflation target 2000 Headline CPI 2.5% ± 1.5% Annual Adjusted annually

Philippines Inflation target 2002 Headline CPI3% ± 1% for 2015-16 and3% ± 1% for 2017-18

Pre-fixed termAdjusted everyfew years

China Annual target n.a. Headline CPI Around 3% for 2015 Annual Adjusted annually

Chart 12-1

Asia-Pacific Region: Realized Inflation and Inflation Expectations (1)

Note: The target index is the headline CPI except for 1998 and 1999, when the CPIX (CPI excluding credit services) was used.

Note: The target index is the headline CPI except for the period from 2000 to 2006, when the core CPI was used. Sources: Bloomberg; Consensus Economics Inc., "Consensus Forecasts."

-2

0

2

4

6

8

10

12

14

95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

y/y % chg. Australia

Inflation expectations (one year ahead) Inflation expectations (five years ahead)CPI (headline) Lower rangeUpper range

CY 1995

-2

0

2

4

6

8

10

12

14

95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

y/y % chg. New Zealand

Inflation expectations (one year ahead) Inflation expectations (five years ahead)CPI (headline) CPIXLower range Upper range

CY 1995

-2

0

2

4

6

8

10

12

14

95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

y/y % chg. South Korea

Inflation expectations (one year ahead)Inflation expectations (five years ahead)CPI (headline)CPI (core)Lower rangeUpper range

CY 1995

Chart 12-2


Note: The target index was the core CPI from 2000 to 2014 and was switched to the headline CPI from 2015.

Sources: Bloomberg; Consensus Economics Inc., "Consensus Forecasts."

-2

0

2

4

6

8

10

12

14

95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

y/y % chg. Thailand

Inflation expectations (one year ahead) Inflation expectations (five years ahead)

CPI (headline) CPI (core)

Lower range Upper range

CY 1995

-2

0

2

4

6

8

10

12

14

95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

y/y % chg. Philippines

Inflation expectations (one year ahead) Inflation expectations (five years ahead)CPI (headline) Lower rangeUpper range

CY 1995

-2

0

2

4

6

8

10

12

14

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

y/y % chg.Indonesia

CPI (headline) Lower rangeUpper range Inflation expectations (one year ahead)Inflation expectations (five years ahead)

-5

0

5

10

15

20

25

30

35

40

95 96 97 98 99 00

y/y % chg.

CY 1995

Chart 12-3


Sources: Bloomberg; Consensus Economics Inc., "Consensus Forecasts."

-5

0

5

10

15

20

25

30

95 96 97 98 99 00

y/y % chg.

CY 1995

-2

0

2

4

6

8

10

12

14

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

y/y % chg.China



CPI (headline)

-2

0

2

4

6

8

10

12

14

95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

y/y % chg. Singapore

CPI (headline)



CY 1995

-2

0

2

4

6

8

10

12

14

95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

y/y % chg. Malaysia

CPI (headline)



CY 1995

Documents

Japan and the United States: Price Developments · 12/6 12/9 12/12 13/3 13/6 13/9 13/12 14/3 14/6 14/9 14/12 15/3 15/6 15/9 Prices Income, bottom third Income, top third All y/y %