— Adds Inflation Expectations at Bottom
— Japan Dec Consumer Confidence Index 40.1 Vs Nov 40.4
— Japan Govt Maintains View: Consumer Confidence Softer

TOKYO (MNI) – Japan’s Consumer Confidence Survey index fell to 40.1
in December from 40.4 in November, posting the sixth consecutive monthly
drop, on lingering concerns about job security, the Cabinet Office said
Monday.

Consumers continued to believe it was not the right time to buy
durable goods, also hampering a recovery in confidence, the survey
showed.

The December index was the lowest since February 2010, when the
index rose to 39.8 from 39.0 in January.

The Cabinet Office maintained its assessment, saying, “Consumer
confidence is softer.”

Last month, it downgraded its view on the November data from the
previous month, when it said the confidence “is nearly flat.”

In the December data, two of the four sub-indexes, overall economic
well-being and income growth, improved from the previous month. By
contrast, the other two sub-indices — willingness to buy durable goods
and employment conditions — worsened.

The index showing sentiment on asset values, which is not included
in the overall consumer confidence index, rose to 39.1 in December from
38.1 in November, showing the first improvement in two months.

Compared to a year earlier, the overall index was still up 2.5
points, posting the 20 straight y/y rise.

The latest survey was conducted on Dec. 15, covering 6,720
households, of which 5,040 responded.

The survey also showed that consumer inflation expectations
remained relatively stable, with a slight upward bias emerging.

The percentage of people forecasting higher prices in a year’s time
showed the first rise in two months, accounting for 43.0% of the total
and up from 41.8% in November. This compared with the record low of
29.2% marked in December 2009.

Meanwhile, the percentage of people expecting lower prices 12
months ahead fell to 12.9% in December from 13.5% in November, marking
the first drop in six months. It was still far below 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.

The annual inflation rate below 2% was forecast by 24.4% of the
surveyed in the latest month vs. 22.1% in the previous month.

Inflation in a range of 2% to 5% was forecast by 14.2% of the total
in the latest month, unchanged from the previous month.

Inflation at 5% or over was forecast by 4.4% of the total in the
latest month vs. 5.5% in the previous month.

Unchanged prices were projected by 34.9% in the latest month vs
35.8% in the previous month.

Price drops of less than 2% were seen by 8.4% of the polled in the
latest month vs. 7.9% in the previous month.

Price drops in a range of 2% to 5% were forecast by 3.4% of those
surveyed in the latest month vs. 4.1% in the previous month.

The annual rate of price drops at 5% or over was foreseen by 1.1%
of the total in the latest month vs. 1.5% in the previous month.

skodama@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4838 **

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