Asia-Pacific News

Japan's core Consumer Price Index rose 0.9% in January

Key Points
  • Japan's core consumer prices rose 0.9 percent in January from a year earlier, government data showed on Friday.
  • Stripping away the effect of fresh food and energy, consumer prices rose 0.4 percent in January from a year ago.
Shoppers and tourists walk through a shopping street in front of the Sensoji temple in Tokyo, Japan, on Thursday, Aug. 8, 2013.
Tomohiro Ohsumi | Bloomberg | Getty Images

Japan's core consumer prices rose 0.9 percent in January from a year earlier, government data showed on Friday.

The core consumer price index, which includes oil products but excludes fresh food prices, compared with economists' median estimate for a 0.8 percent annual gain.

Stripping away the effect of fresh food and energy, consumer prices rose 0.4 percent in January from a year ago.

With the core consumer inflation steady in January from a year earlier, it is a sign that 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.

"While energy inflation should pick up again towards the middle of this year, it should start to slow towards year-end ... And with wage growth still muted, a marked pick-up in service inflation is not on the cards," said Marcel Thieliant, senior Japan economist at Capital Economics.

"The upshot is that the BOJ's 2 percent inflation target remains out of reach."

Japan's economy expanded at an annualised 0.5 percent in the October to December period, 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.