Japan inflation up, but far from target
tokyo — Japan’s households spent more than expected in November while consumer inflation ticked up and the jobless rate hit a fresh 24-year low, offering the central bank some hope an economic recovery will drive up inflation to its two per cent target.
But the increase in prices was due mostly to a boost from rising fuel costs that is seen fading in 2018, keeping the Bank of Japan under pressure to maintain its huge monetary support even as other central banks seek an end to crisismode policies.
Minutes of the BoJ’s October rate review showed that while most central bank policymakers saw no need to ramp up stimulus, they agreed on the need to sustain “powerful” easing for the time being.
“There’s a chance inflation may gradually accelerate towards the fiscal year beginning in April,” as a tightening job market pressures companies to raise wages, said Takeshi Minami, chief economist at Norinchukin Research Institute.
“But inflation remains distant from the BoJ’s two per cent target, so the central bank will probably maintain its current policy framework.” Spending was driven by broadbased gains, with households loosening the purse strings for items such as refrigerators, washing machines, and sporting goods and services such as eating-out and travel. Behind the improvement is a slow but steady rise in household income. Wage earners’ disposable income rose 1.8 per cent in November from a year earlier, suggesting that higher incomes have encouraged consumers to open their wallets.
Japan’s top four department stores all saw sales increase in November from a year earlier on brisk
There’s a chance inflation may gradually accelerate towards the fiscal year beginning in April Takeshi Minami, chief economist at Norinchukin Research Institute
demand for luxury items. The nationwide core consumer price index (CPI), which includes oil goods but excludes volatile fresh food prices, rose 0.9 per cent in November from a year earlier, government data showed on Tuesday, marking the 11th straight month of gains.
Despite the increase seen in wages, Prime Minister Shinzo Abe has urged companies to raise wages by three per cent or more next year, keeping pressure on firms to spend their huge cash pile to broaden the benefits of his stimulus policies.
Separate data released on Tuesday showed prospects for a sustained recovery were picking up. The unemployment rate hit a fresh 24-year low of 2.7 per cent in November and job availability rose to a nearly 44-year high.
Household spending rose 1.7 per cent in November from a year earlier, far exceeding forecasts for a 0.5 per cent increase.