Japan inflation ticks up after yearlong slide
Japanese consumer prices picked up in January for the first time in almost a year, government data showed yesterday, halting a long string of declines as Tokyo struggles to put deflation in the rear view mirror. A key inflation index, which excludes the volatile cost of fresh food, rose 0.1 percent from a year earlier, the internal affairs ministry said. The increase, largely due to rebound in oil and energy prices, marked the first uptick in 11 months and ended the longest string of price declines in more than five years. It was also the first positive monthly inflation figure since Dec 2015.
“Consumer prices will continue to pick up, thanks to oil and a weak yen,” said Maiko Noguchi, a senior economist at Daiwa Securities. “The question is: will underlying strength in inflation pick up with stronger wage growth, household spending and business confidence? I don’t think it will at this point,” she told Bloomberg News before the data release. Spending by Japan’s households remains weak, separate data showed yesterday, with a 1.2 percent on-year fall in January. That was the 11th consecutive month of decline.
Slow wage growth is weighing on consumer spending which accounts for more than a half of Japan’s GDP - despite a tight jobs market. Unemployment has been at its lowest level in around 20 years. Fresh data Friday showed the jobless rate edged down from 3.1 percent in December to 3.0 percent in January. This week, Japan posted an unexpected drop in factory output for January, the first fall in six months and the latest red flag for the world’s number three economy. Japan has been struggling to reverse a years-long deflationary spiral of falling prices and lackluster growth. — AFP