Japan Jan core CPI flat, keeps policymakers under pressure
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.