Ja­pan in­fla­tion about zero for 10th month

The Pak Banker - - 6BUSINESS -

TOKYO: Prices in Ja­pan didn't rise in Fe­bru­ary, re­in­forc­ing just how far the na­tion re­mains from reach­ing the Bank of Ja­pan's 2 per­cent in­fla­tion goal. Ja­pan's con­sumer prices ex­clud­ing fresh food didn't budge for a sec­ond con­sec­u­tive month, as forecast. Strip­ping out en­ergy and food costs, the gauge rose 0.8 per­cent from last year, ac­cord­ing to a sta­tis­tics bureau re­port on Fri­day. Time is tick­ing for Gover­nor Haruhiko Kuroda, who is fore­cast­ing in­fla­tion will ac­cel­er­ate to reach 2 per­cent in about a year. Even with the cen­tral bank's adop­tion in Jan­uary of a neg­a­tive in­ter­est rate along­side the BOJ's al­ready un­prece­dented as­set pur­chases, prices aren't ris­ing.

"In­fla­tion hasn't hit bot­tom yet -- it's go­ing down fur­ther," Shinichiro Kobayashi, a se­nior econ­o­mist at Mit­subishi UFJ Re­search and Con­sult­ing in Tokyo, said be­fore the re­port was re­leased. "It's grad­u­ally be­com­ing clearer that Kuroda won't at­tain the price tar­get as he projects."

Kobayashi ex­pects con­sumer prices ex­clud­ing fresh food will drop by as much as 0.5 per­cent in May or June, and the bank will prob­a­bly have to add stim­u­lus in July, he said.

There is lit­tle sign of in­fla­tion­ary pres­sure in Ja­pan. The econ­omy con­tracted last quar­ter, wage growth is slow, the yen has strength­ened -- driv­ing down im­port prices -- and al­though oil has risen about 10 per­cent this year, its price is still about half of what it was at the end of Fe­bru­ary 2015. The price gauge Kuroda of­ten cites also is show­ing weak­ness. The BOJ's price index, which ex­cludes en­ergy and fresh food, gained 1.1 per­cent in Fe­bru­ary for a sec­ond month, down from 1.3 per­cent in De­cem­ber, ac­cord­ing to a cen­tral bank re­port on Fri­day. "It's likely the BOJ's price mea­sure will slow to be­low 1 per­cent this year with the fad­ing im­pact of a weak yen and sub­dued growth in base salaries," said Koya Miya­mae, an econ­o­mist at SMBC Nikko Se­cu­ri­ties Inc.

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