Japanese Consumers Maintain Confidence: More Households Expect Prices to Rise Than to Fall

The diffusion index of Consumer confidence in Japan rose sharply in early 2004 and has shown little change up or down since then. However, the index in February, 2006 at 49.8 is the highest level since early 1990.

Monthly data on consumer confidence in Japan are available only from April, 2004 and are seasonally unadjusted. The data are published by the Cabinet Office which has engaged the market research firm, Shin Joho Center, Inc. to survey and analyze data from a sample of households that contains 5,040 two or more person households and 1,680 single person households. (Some problems with the data collection of the market research firm surfaced last August, but have subsequently been resolved to the satisfaction of the Cabinet Office.) To gain some historical perspective, the new monthly series is linked to the old quarterly Consumer Confidence Index, excluding the single person households. The result is shown in the attached chart where the quarterly data prior to April 2004, have been interpolated and linked with the new series.

Since September of last year, more Japanese consumers have been expecting prices to rise than those expecting prices to fall. We have aggregated the data shown in the Haver Data Base--Japan: Price Expectations. In the data base percentages are shown for up 2% or less, up between 2 and 5% and up over 5%, no change, down less than 2%, down between 2 and 5% and down over 5% and "don't know". In the table below the total of percentages expecting rises, and the total of those expecting no change or a decline are shown with the percentage responding 'Don't know" for the months since June 2005...