JAPANESE companies expect consumer inflation to fall short of the central bank’s 2 percent target for the next five years, emphasizing the challenge it faces in trying to drive up inflation expectations through aggressive monetary stimulus.

    Firms polled by the Bank of Japan (BOJ), as part of a detailed “tankan” survey for June, said they expect consumer prices to rise an average of 1.5 percent a year from now, unchanged from projections made three months ago.

    The outcome casts doubt on the BOJ’s argument that it can achieve its 2 percent price goal sometime next year as improvements in the economy heighten inflation expectations — encouraging firms and households to spend more sooner rather than later.

    “Companies feel that while Japan is no longer in deflation, it is in a state of mild dis-inflation,” said Hideo Kumano, chief economist at Dai-ichi Life Research Institute.

    Under its “quantitative and qualitative easing” (QQE) enacted in April last year, the BOJ pledged to accelerate consumer inflation to 2 percent in roughly two years via aggressive asset purchases to end 15 years of mild deflation.(SD-Agencies)