The percentage of Japanese households anticipating inflation to accelerate a year from now hit the highest level in nearly four years, a central bank survey showed.
But the survey also showed households were more pessimistic about the economy, which is being pressured by slowing global demand and the U.S.-China trade war.
The Bank of Japan's survey on people's livelihood showed the percentage of households who expect prices to rise a year from now was 80.5% in July, the highest level since September 2015. It was up from 78.7% in March.
But a separate index measuring households' perceptions of the economy's performance worsened to minus 25.0 in July, the lowest since June 2016, and falling from minus 19.2 in March.
The survey is among key data the BOJ looks at in assessing the impact of its ultra-easy monetary policy.