Ja­pan in­fla­tion re­main­ing list­less, no respite for BoJ

The Pak Banker - - FRONT PAGE -

TOKYO: Ja­pan is ex­pected to re­port next week that core con­sumer prices were un­changed in Jan­uary from a year ear­lier, halt­ing a brief rise in the pre­vi­ous two months, a Reuters poll showed, adding to doubts about pol­i­cy­mak­ers' abil­ity to re­flate the econ­omy.

Slug­gish con­sumer de­mand and slid­ing fuel prices likely kept in­fla­tion sub­dued, while ef­fects from the yen's weak­en­ing in the last few years have fallen off, an­a­lysts said.

The core con­sumer price in­dex (CPI), which in­cludes oil prod­ucts but ex­cludes volatile fresh food prices, likely reg­is­tered no change last month af­ter an­nual 0.1 per­cent rises in De­cem­ber and Novem­ber, ac­cord­ing to the poll of 22 an­a­lysts.

"En­ergy price falls such as gaso­line and elec­tric­ity are the main fac­tor. But there is also a pause in price gains in foods and daily ne­ces­si­ties due to weak con­sumer spend­ing," Takumi Tsun­oda, se­nior econ­o­mist at Shinkin Cen­tral Bank said in the sur­vey. Koya Miya­mae, se­nior econ­o­mist at SMBC Nikko Se­cu­ri­ties, said that core con­sumer prices will likely fall in Fe­bru­ary and con­tinue de­clin­ing un­til around June even if cur­rency and oil mar­kets stay the same.

"Core CPI is ex­pected to bot­tom out around sum­mer but it may be dif­fi­cult to re­turn to plus ter­ri­tory within this year," he said. Core con­sumer prices in Tokyo, avail­able a month be­fore the na­tion­wide data, likely de­clined 0.2 per­cent in Fe­bru­ary from a year ear­lier, com­pared with a 0.1 per­cent slip in the year to Jan­uary.

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