Consumer prices are likely to increase gradually, the BOJ said in a statement Aug. 8.
“Consumer sentiment is starting to improve,” said Mikihiko Yamato, deputy head of research at JI Asia in Tokyo. “While people’s salaries are not increasing, bonuses are rising and I think they will spend a lot in the December holiday season. More people are buying themselves things that are a little bit better than what they usually buy.”
Still, some investors were disappointed with fiscal first- quarter earnings that rose less than they had expected. The broader Topix index has dropped 4.7 percent in the past month, trimming this year’s gain to 33 percent.
“People in the market had already expected the weak yen will boost profit,” said Yoshihiro Ito, chief strategist at Okasan Online Securities in Tokyo. “Companies still need to increase capital spending before consumer spending will be invigorated.”
The higher-than-estimated earnings reported for last quarter also weren’t enough to extend gains in the benchmark stock index. The Nikkei 225 fell 0.45 percent between the end of last quarter and Aug. 9.
Still, the benchmark has climbed 31 percent this year, headed for the biggest annual gain since 2005, and the best performance among the 18 biggest equity indexes tracked by Bloomberg.
Ito of Okasan said he doesn’t expect big gains in share prices in the six months ending March 2014.
“It will take three quarters to a full year to see the volume effect on exports from a weaker yen,” said Nagahama of Dai-Ichi Life. “This may also mean we can have hope for positive surprises in the current quarter.”