Classifieds | Archives | Jobs | About TGT | Contact | Subscribe
 | 
Last updated 3 minutes ago
Printer Friendly Version | TGT@Twitter | RSS Feed |
HOME LOCAL MIDEAST ASIA WORLD BUSINESS SPORT OPINION WRITERS
Japan’s inflation stagnates
August 25, 2018
 Print    Send to Friend

TOKYO: Japan’s annual consumer inflation stalled in July and government pressure on carriers to cut smartphone charges could undercut prices ahead, further hindering the central bank’s efforts to achieve its elusive price target. The government data keeps Bank of Japan (BOJ) under pressure to keep easy monetary policy.

An index stripping away the effect of volatile fresh food and energy costs barely rose, a sign the gain in consumer prices was driven more by higher energy costs than a pickup in private consumption, analysts said.

Stubbornly soft inflation could delay the BOJ’s exit from ultra-loose policy. It would also be a setback for premier Shinzo Abe’s reflationary ‘Abenomics’ policies, as he eyes re-election in his ruling party’s leadership race in September.

“Consumer price gains remain driven by volatile fresh food and energy inflation while underlying inflation remains subdued,” said Marcel Thieliant, senior Japan economist at Capital Economics.

“Price pressures should strengthen ahead of next year’s sales tax hike but inflation is set to remain well below the BOJ’s 2 per cent inflation target.”

The nationwide core consumer price index (CPI), which includes oil prices but excludes volatile fresh food prices, rose 0.8 per cent in July from a year earlier, unchanged from the previous month’s gain and falling short of a median market forecast for a 0.9 per cent increase.

The so-called core-core index, a more closely watched gauge the BOJ uses to strip away the effect of both energy and fresh food costs, was up 0.3 per cent year-on-year in July after rising 0.2 per cent in June, government data showed on Friday.

The data underscores the challenge the central bank faces in eradicating Japan’s entrenched deflationary mindset that discourages firms from raising prices for fear of scaring away cost-sensitive consumers.

Adding to uncertainty over the prospects for hitting the BOJ’s price goal, top government spokesman Yoshihide Suga was quoted by media as saying that Japanese carriers have room to slash smartphone usage charges by 40 per cent.

The government hopes that by reducing the burden of smartphone costs for households, it can stimulate spending in other areas and boost overall consumption.

But if smartphone users don’t immediately start spending elsewhere this measure could backfire particularly for the BOJ, because a 40 per cent cut in smartphone costs could push inflation into negative territory.

Estimates from government and private analysts show a 40 per cent cut in smartphone usage fees could push down core CPI by roughly 0.96 per centage point.

Reuters

Add this page to your favorite Social Bookmarking websites
Comments
 
Post a comment
 
Name:
Country:
City:
Email:
Comment:
 
    
    
Related Stories
Japan’s exports fall most in 2 years as China shipment weakens
TOKYO: Japan’s exports posted their biggest decline in two years as China-bound shipment tumbled, fuelling concerns about slowing global demand as the business mood sours..
ANA to order $4.33 billion jets
SEATTLE/TOKYO: Japan’s ANA Holdings said it would order 38 planes worth $4.33 billion from Boeing Co and Airbus, and buy a stake in Philippines Airlines parent PAL Holdin..
BoJ slashes inflation outlook
TOKYO: The Bank of Japan (BOJ) cut its inflation forecasts on Wednesday and warned of rising risks to the economy from faltering global demand, further pushing back polic..
Japan’s machinery orders stall
TOKYO: Japan’s core machinery orders slowed sharply in November in a sign corporate capital expenditure could lose momentum as a bruising US-China trade war spills into t..
Japan’s household spending falls for third month
TOKYO: Japan’s household spending fell more than expected in November to mark the third straight month of year-on-year declines, government data showed on Friday, adding ..
FRONTPAGE
 
GALLERY
 
PANORAMA
 
TIME OUT
 
SPORT
 
 
Advertise | Copyright