Bank of Japan survey reveals improving public economic outlook

The public's assessment of current economic conditions showed a notable improvement in the December 2025 survey.

The Diffusion Index (D.I.) for 'Have improved' minus 'Have worsened' rose to -50.4, up from -58.7 in September 2025.

This indicates a decrease in the proportion of respondents who felt conditions had worsened, falling from 62.5 percent to 55.8 percent.

Even more pronounced was the shift in the outlook for future economic conditions.

The D.I. for 'Will improve' minus 'Will worsen' significantly increased to -18.3 from -40.2 in the previous quarter.

The share of respondents expecting conditions to worsen dropped sharply from 45.7 percent to 32.1 percent, while those expecting improvement more than doubled from 5.5 percent to 13.8 percent.

This suggests a growing optimism among the public regarding Japan's economic trajectory in the coming months.

Despite the improved economic outlook, the public's perception of current price increases remains high.

Seventy percent of respondents stated that prices had gone up significantly, a slight increase from 69.4 percent in September.

Another 25.2 percent felt prices had gone up slightly.

Expectations for future price increases also remained elevated, with 86.0 percent anticipating prices to rise, although the proportion expecting significant increases slightly declined from 32.1 percent to 28.2 percent.

Meanwhile, household financial conditions showed a slight deterioration, with the D.I. for 'Have become better off' minus 'Have become worse off' moving from -51.6 to -52.2.

The share of those feeling worse off increased to 57.2 percent.