Japan core inflation decreases

Japan’s core inflation was seen collapsing further in December as the prices of oil continue to tumble.

Even though, the Japanese economy shows encouraging signs of economic revival, the continuous deflation data would probably cause more distance to the central bank’s 2% price target.

The chief economist at Dai-Chi life Research Institute, Yoshiki Shinke, expects steady slow in the Japan’s inflation for the upcoming months.

He also indicated that there is a more significant downward pressure from failing crude oil prices compared to the improvement of import costs to weakening yen.

The core consumer prices excluding the tax-hike impacts rose by 1.1% last year.

The BOJ hopes to delay any easing and concentrate further on the pressure from lower oil prices.

The steady economic recovery of USA, being Japan’s major export market may encourage the BOJ to adopt a systematic approach on policy.

Consumption and production will probably recover as the April’s sales tax hike fades in the market.

Nevertheless,the consumer’s purchasing power may get a quick boost from cheaper oil prices.

Also, factory output indicated a rise of 1.0% from brisk shipments of smart-phone parts to Asia and domestic car sales in December.

Furthermore, the unemployment rate also improved, resulting in the lowest level since 1997.According to a Reuters poll, the Japanese economy has expanded to 3.2% in October-December period.

Source: Reuters
Priscilla Camryn By: Priscilla Camryn
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