The latest Tankan survey showed that output prices hit a record high, driven by the influence of higher energy costs on upstream industries. While higher input costs will be passed on to consumers over the coming months, the continued decline in crude oil prices means that any such upward pressure will be transitory. Nonetheless, with inflation expectations starting to detach from the BoJ’s 2% target, the Bank can’t afford to ignore a renewed overshoot of its inflation target.
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