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October 22, 2019

Japan’s core inflation reached 1% in February 2018

japan core inflationJapan’s core inflation reached 1% in February 2018 for the first time in three and a half years, which is a tentative signal for progress by the Central Bank, which is targeting inflation rate of 2%. The 14th consecutive increase in consumer prices follows a 0.9% growth in January, according to data from the interior and communications ministry, released on Friday.

The data for 1.0% coincided with the forecast of economists. The Core Consumer Price Index excludes volatile prices of fresh food. The pace of growth is the fastest since August 2014, without taking into account the impact of the increase in sales tax in April 2014.

The preferred inflation rate of Bank of Japan also picked up, rising by 0.5% in February from 0.4% in January. The stronger data on the indicator, which excludes energy prices, could also speculate about a possible increase in the interest rates of the bank this year.

However, unlike the Federal Reserve, which raised its key interest rate earlier this week, the Bank of Japan will obviously retain its current position for some time. The governor Haruhiko Kuroda, already approved by Parliament for a second term, has repeatedly stated that the bank will continue its current relief policy until it achieves its inflation target, although it said theoretically it was possible to raise interest rates previously.

The analysts, however, warn that sharp increases in fresh product prices, which have boosted the overall consumer price index over the past few months, may undermine consumer confidence and make them less inclined to spend. The overall index rose by 1.5% on an annual basis in February.

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