TOKYO Nearly 90 percent of Japanese firms expect consumer inflation to fall short of the central bank's 2 percent goal in the next fiscal year, a Reuters survey showed on Friday, adding weight to the argument of many analysts who say the target is too ambitious.
Seeking to help Japan escape 15 years of grinding deflation, the Bank of Japan offered an intense burst of monetary stimulus in April, pledging to double the supply of money to the achieve the 2 percent goal.
Inflation has gradually picked up with core consumer prices up 0.7 percent in the year to September, although most of the increase was due to rising fuel prices and a weak yen that inflates the cost of raw material imports.
The Reuters Corporate Survey showed that half of the 235 firms which responded to the question on inflation said inflation was likely to range between 0.5 percent and 1.5 percent in the business year beginning in April 2014.
But a significant portion of respondents did not see even that, with nearly 40 percent saying they expect inflation to range from negative levels to about 0.5 percent.
If the Bank of Japan's policies work as expected, companies will be discouraged from holding onto their huge piles of cash and nudged into boosting spending on investment and wages, officials at the central bank say.
But the survey, conducted October 25 and November 11, also showed only a quarter of companies planning to increase capital spending and just 8 percent thinking of raising wages, further suggesting that many are not yet convinced Japan will make a decisive end to deflation.
"We have ample cash for now, so the BOJ's policy doesn't affect our business operations much," said an executive at an electric machinery maker in the survey.
In its most recent forecasts issued last month, the BOJ projects core consumer inflation of 1.3 percent next fiscal year and 1.9 percent in fiscal 2015.
But even some within the BOJ's board side with many private-sector analysts who say the 2 percent price goal and its time-frame of trying to achieve it in two years are too ambitious.
Some market participants believe the central bank may be forced to ease monetary policy further next April, when the economy faces headwinds from a national sales tax hike and when the bank needs to issue new quarterly projections.