BOJ may top up stimulus as consumer inflation flat
Print Edition
JAPAN’S consumer inflation was flat in the year to February as low energy costs and weak consumption put a lid on price growth, government data showed yesterday, keeping the central bank under pressure to top up stimulus although it eased policy less than two months ago.
A separate Bank of Japan index calculated by the central bank to strip out the effects of energy and fresh food prices showed consumer inflation at 1.1 percent in the year to February, flat from January.
The data reinforce a dominant market view that the BOJ will be forced to cut its inflation forecasts and push back the timing for hitting its 2 percent price target at a quarterly review of its projections next month.
“Japan won’t see inflation hit the BOJ’s target in the next few years,” said Koya Miyamae, senior economist at SMBC Nikko Securities.
“The BOJ is falling into a vicious cycle in which it remains under pressure for further easing even as it has few effective policy means available.”
The government’s core consumer price growth calculation for Tokyo, considered a leading indicator of nationwide prices, marked the biggest annual drop in nearly three years in March, suggesting that inflation will remain subdued on weak demand as the world’s third-largest economy skirts recession.
Tokyo’s core CPI fell 0.3 percent in the year to March, the first time it fell by as much since April 2013 and bigger than a median market forecast for a 0.2 percent decrease.
The nationwide core Consumer Price Index, which includes oil products but excludes volatile fresh food prices, was unchanged in February from a year earlier, government data showed yesterday.
That compared with a median market forecast of a 0.1 percent increase and followed flat growth marked in January.
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