Local Inflation Expected To Peak By June 2022

• Inflation over the June 2022 to March 2024 quarter (next eight quarters) is projected to average within the range of 8.0% to 9.0%, which is above the previous projection of 6.0% to 7.0%. Inflation is projected to peak in the range of 12.0% to 15.0% by June 2022 and to fall within the target range by the June 2023 quarter. 
• The main factors underpinning the inflation forecast are:  elevated inflation, domestic demand, agricultural food price inflation, oil prices, and inflation in the US economy. Elevated inflation expectations are also expected to persist. In the most recent inflation expectations survey, respondents expected inflation to accelerate over the 12-month horizon to 12.1%, which is above the Bank’s target range. 
• Domestic demand is forecasted to continue to recover, albeit at a slightly stronger pace than previously anticipated. Agricultural food price inflation is projected to accelerate moderately in the context of increases in input prices (in particular fertilizer) and as demand conditions improve.  Oil prices are projected to average US$100.20 per barrel for the next eight quarters compared to the previous average of US$72.50. 
• Additionally, US inflation is forecasted to average 5.2% over the next eight quarters, higher than the previous forecast of 4.3%.

(Source: BOJ Quarterly Monetary Policy Report)