Japan inflation falls back to zero in January: Govt
Japan's inflation rate fell to zero in January, government data showed on Friday, in another blow to Prime Minister Shinzo Abe's three-year attempt to put an end to a years-long battle with falling prices.
Japan has suffered deflation -- a debilitating drop in prices -off and on since the late 1990s and authorities have introduced various policies to fight it, including record low central bank interest rates.
Abe came to power in late 2012 vowing to fix the problem for good through an array of policies dubbed "Abenomics" that include government spending and a massive central bank bond-buying programme. The government's internal affairs ministry announced that Japan's growth in core consumer prices, which exclude volatile fresh food prices, was unchanged in January from a year ago after two months of tepid 0.1 percent growth. Falling oil prices -resource-poor Japan is a major energy importer -- and a recent rise in the value of the Japanese yen are seen as further hampering efforts to achieve moderate price growth.
The latest figure underscores Abe's challenge with the outlook being for further price weakness.
"In light of falling import prices and sluggish economic activity, we think that the slowdown in underlying inflation has further to run," said Marcel Thieliant, senior Japan economist at Capital Economics.
While offering pro-business policies, Abe has also pushed Japan Inc to share profits with consumers via wage hikes, saying such a move would be key to boosting consumption, prices and overall growth.
Despite incentives, Japanese businesses have remained cautious to invest in their ventures and offer meaningful wage increases, citing the uncertain economic outlook.
Last month, the government said Japan's inflation rate stood at 0.5 percent in 2015, far short of the 2.0 percent target that the BoJ had promised to achieve by early last year.