FILE PHOTO: A clerk talks to a customer at a flower shop selling new year’s decorations at a shopping mall in Tokyo, Japan December 26, 2017. REUTERS/Kim Kyung-Hoon/File Photo
February 23, 2018
By Leika Kihara
TOKYO (Reuters) – Japan’s core consumer inflation was steady in January from a year earlier in a sign a strengthening economy has yet to prompt companies to raise prices, a challenge policy makers have yet to overcome despite years of massive stimulus.
Subdued inflation has forced the Bank of Japan to maintain ultra-loose policy even as the economic recovery gathers momentum, suggesting it will lag behind its global peers in dialing back its crisis-era stimulus.
While inflation has been absent or tepid in many advanced economies over the last couple of years despite a revival in growth, Japan is only just starting to emerge from nearly two decades of deflation.
The nationwide core consumer price index, which includes oil products but excludes volatile fresh food costs, rose 0.9 percent in January from a year earlier, data showed on Friday.
That compared with a median market forecast for a 0.8 percent rise and matched the pace for December.
When the effect of fresh food and energy are stripped away, prices rose 0.4 percent in January following a 0.3 percent increase in December, the data showed.
Japan’s economy expanded at an annualized 0.5 percent in October-December, posting its longest continuous expansion since the 1980s boom, thanks to robust consumer spending.
But inflation remains distant from the BOJ’s 2 percent target as companies hold off on raising prices and wages, citing uncertainty over the economic outlook.
Prime Minister Shinzo Abe has been pushing companies to raise wages by 3 percent or more to spur consumer spending, piling pressure on firms to spend their huge cash pile to broaden the benefits of the strengthening economy.
The government began publishing nationwide inflation numbers a week earlier than before, starting from the data for January. Tokyo consumer inflation figures will be released on March 2.
(Editing by Shri Navaratnam)
