opinion survey began a biannual questionnaire about information sources for households ’ price views in september 2013. according to the most recent ( september 2014 ) survey for both present price levels and five - year inflation expectations, “ developments in prices of frequently - purchased items such as foodstuffs ” was chosen as the most applicable source, followed by “ developments in gasoline prices. ” over 50 percent of all respondents regarded those two options as their most relevant information sources ( chart 17 ). • the indicators for five - year inflation expectations remain stable. at first glance, adopting the 2 percent price stability target and qqe in 2013 appear to have exerted no significant effects on inflation expectations. however, i will return to this issue. e. summary of households ’ inflation expectations and relation to those of firms let me know sum up my observations on households ’ inflation expectations and relate them to the expectations of firms. 1. households ’ five - year inflation expectations on average appear to remain stable at around 4 percent at first glance. however, the survey revealed that the basis for five - year inflation expectations largely depends on the prices of frequentlypurchased items and gasoline – and not much from monetary policy. thus, stable movements in inflation expectations do not necessarily mean that their medium - to long - term inflation expectations are anchored. bis central bankers ’ speeches 2. one interesting feature is that households rely more heavily on general price - related information and various other sources with respect to five - year inflation expectations compared with perceptions of present price levels. for example, they rely relatively more heavily on “ media reports on individual prices of goods and services and prices in general ” and “ developments in foreign exchange rates ” ( chart 17 ). 3. in addition, the indicators for one - and five - year inflation expectations remain largely unchanged before and after adopting the 2 percent price stability target and qqe. it might appear at first glance that the effects of the monetary policy have been limited. however, the survey responses are known to have reporting biases : outliers with extreme numbers ; downward rigidity or the tendency to avoid negative numbers – even when respondents expect deflation ; and many responses with integers, especially multiples of five. after taking these biases into account, the modified distribution of one - and five - year inflation expectations has displayed notable changes since 2013. namely, the skew to the deflationary side has diminished for both inflation expectations. the right tail to the inflationary side for five - year

inflation expectations has contracted. as a result, the spike at around 2 percent has become sharper for both inflation expectations, which shows that households ’ inflation expectations concentrated at around 2 percent ( chart 18 ). this may suggest that the change in the bank ’ s monetary policy in 2013 has positively affected households ’ inflation expectations, leading to a greater concentration of responses to about 2 percent. 1 4. households ’ inflation expectations are higher than those of firms, which suggests the presence of an upward bias. this may be because of two possible reasons. one is that households and firms envisage different prices when responding to the survey questionnaire. households are asked to respond to “ overall prices of goods and services the respondents purchase, ” whereas firms are asked to respond to general prices measured by the cpi. the reason households are asked in this manner is that some respondents are unfamiliar with the cpi, which makes it difficult to form an outlook based upon it. 5. the other possible reason for the upward bias is that households tend to perceive and expect higher price levels as a corollary of long - standing sluggish income growth, resulting in an anticipated tightening of household budgets. by contrast, firms tend to form conservative inflation expectations based on the surrounding economic environment and information obtained from transactions with other firms. given that firms appear to weigh more on macro information and that some of them perceive price developments based not only on input prices but also on sales prices, their inflation expectations as a whole are more likely to be lower than those of households and more closely approximate the rate of actual cpi inflation. the most important finding is that households expect that prices will have risen one year ahead and will increase over the next five years ; such an expected price rise is regarded as rather unfavorable because it is associated with an expected decline in their future real income. partly reflecting such limited tolerance for price rises by households, large firms ( manufacturing and nonmanufacturing ) may tend to project a relatively conservative, lower increase in both general prices and sales prices than small firms. households ’ poor tolerance for price rises reflects the perception that their present income level has declined compared with one year earlier and also that their income level one year ahead will not increase much. to achieve the 2 percent price stability target with a sustainable increase in private spending, it is necessary for price rises to be widely accepted see shunsaku nishiguchi, jouchi nakajima, and kei imakubo, “ disagreement in households ’