Ja­pan Jan core CPI flat, keeps pol­i­cy­mak­ers un­der pres­sure

The Pak Banker - - BUSINESS -

TOKYO: Fall­ing fuel costs kept Ja­pan's core con­sumer prices un­changed in Jan­uary from a year ear­lier, well below the cen­tral bank's 2 per­cent tar­get, high­light­ing the daunting task pol­i­cy­mak­ers face in at­tempt­ing to lift Ja­pan out of stag­na­tion. A sep­a­rate in­dex by the Bank of Ja­pan that strips away the ef­fect of en­ergy costs also showed in­fla­tion slow­ing, sug­gest­ing that weak con­sump­tion and fall­ing im­port costs are dis­cour­ag­ing firms from rais­ing prices for a broad range of goods. The data un­der­scores the chal­lenges the Bank of Ja­pan (BOJ) faces, even af­ter its shock de­ci­sion last month to adopt neg­a­tive in­ter­est rates, in gen­er­at­ing a pos­i­tive cy­cle in which ris­ing cor­po­rate prof­its drive up wages and con­sump­tion. The flat growth in the core con­sumer price in­dex (CPI), which in­cludes oil prod­ucts but ex­cludes volatile fresh food prices, matched a me­dian mar­ket fore­cast and fol­lowed a 0.1 per­cent rise in De­cem­ber, data from the In­ter­nal Affairs Min­istry showed on Fri­day. "The re­cent strength­en­ing of the yen im­plies that prices of im­ported con­sumer goods will con­tinue to fall. We there­fore ex­pect goods in­fla­tion to slow fur­ther in com­ing months," said Mar­cel Thieliant, se­nior econ­o­mist at Cap­i­tal Eco­nom­ics. "To­day's data pro­vide an­other rea­son for pol­i­cy­mak­ers to step up the pace of (mon­e­tary) eas­ing." Core con­sumer prices in Tokyo, which is a lead­ing in­di­ca­tor of na­tion­wide price trends, fell 0.1 per­cent in Fe­bru­ary to mark the se­cond straight month of an­nual de­clines, the data showed. A 10.7 per­cent fall in en­ergy costs was mainly be­hind sub­dued na­tion­wide in­fla­tion.

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