Japanese public sees worsening economy, persistent high prices

The Bank of Japan's latest opinion survey reveals a significant deterioration in public perception of economic conditions.

The Diffusion Index (D.I.) for present economic conditions compared with one year ago registered minus 56.7 percentage points in June 2026, a notable decline from minus 45.5 in March.

A majority of respondents, 62.5 percent, felt conditions had worsened, while only 5.8 percent saw improvement.

The outlook for one year from now also remained pessimistic, with the D.I. at minus 42.5 percentage points and 49.9 percent expecting further worsening.

Regarding price levels, the public continues to perceive significant increases, with 60.3 percent reporting higher prices compared to a year ago.

The average perceived increase was 16.5 percent, and the median was 10.0 percent.

The interest rate level D.I. registered minus 9.3 percentage points, indicating a perception that rates are 'too low' by a plurality of 33.3 percent, while 24.0 percent considered them 'too high'.

Household circumstances reflected widespread pessimism, with the D.I. for present conditions at minus 52.2 percentage points, as 55.0 percent felt they had become worse off.

Income perceptions remained subdued, with the D.I. for present income at minus 10.7 percentage points, and the outlook at minus 15.5. Spending D.I. for the present was positive at 49.1, but the outlook for future spending was negative at minus 30.0. 'Future developments in prices' was cited by 71.5 percent as a major factor for spending decisions, and 'low price' was the top consideration (60.2 percent) for choosing goods.

Employment concerns were moderate, with the D.I. at minus 2.2, though 27.6 percent were 'quite' worried.