TOKYO: Japan’s core consumer prices marked a ninth straight month of annual gains in September but failed to accelerate from the previous month, underscoring the central bank’s huge task as it struggles to meet an ever-elusive 2% inflation target. Most of September’s scant inflation was driven by continued rises in energy costs, which were partly offset by falling cellphone bills – another sign that companies still baulk at raising prices for fear of stalling a fragile recovery in private consumption. Still, the Bank of Japan is set to largely maintain its current inflation forecasts at a policy meeting next week, blaming stagnant inflation on factors such as corporate efforts to boost productivity.
The nationwide core consumer price index, which includes oil products but excludes volatile fresh food prices, rose 0.7% in September from a year earlier, matching August but lower than a median market forecast of 0.8%. “Private consumption was probably weak in July-September and gains in household income may have slowed due to weak summer bonus payments,” said Takeshi Minami, chief economist at Norinchukin Research Institute. “There’s still quite some distance from the BoJ’s 2% target, so monetary policy will be steady for the time being.” A 7.6% rise in energy prices made up most of the consumer price growth, a sign inflation was still driven by temporary factors rather than sustained strength in demand. Stripping away the effect of fresh food and energy, consumer prices rose 0.2% in September from a year ago, data from the internal affairs ministry showed. Core consumer prices in Tokyo, available a month before the nationwide data, were up 0.6% in October from a year earlier, against a median forecast for a 0.5% rise. It was the fastest annual pace since March 2015, a potential source of comfort for the BoJ. Japan’s economy expanded at an annualised 2.5% in the second quarter as consumer and corporate spending picked up, with steady growth likely to be sustained in coming quarters.
Japan is experiencing near full employment, and wholesale prices rose in September at the fastest annual rate in almost nine years as raw material costs surged. Some firms, such as brewer Asahi Group Holdings Ltd and restaurant chain Torikizoku Co, have announced plans to raise prices. But others remain cautious including Aeon Co Ltd, Japan’s biggest retailer by sales, which plans more price cuts to attract consumers. A woman chooses clothes at a shop in Tokyo. Core consumer prices in Tokyo, available a month before the nationwide data, were up 0.6% in October from a year earlier, against a median forecast for a 0.5% rise.