Japanese inflation shows price target getting closer

Friday 28 March 2014 08.09
Japan's core consumer prices rose 1.3% in February
Japan's core consumer prices rose 1.3% in February

Japanese consumer prices rose for the ninth consecutive month in February while unemployment fell to a more than a six-year low.

The new data gave a boost to Tokyo's efforts at reigniting an economy plagued by years of deflation.

Stripping out volatile fresh food prices, "core" consumer prices rose 1.3% in February on an annual basis, the same rate for December and January, according to the internal affairs ministry.

Excluding energy prices and foodstuffs, nationwide consumer prices rose 0.8% in February.

Separate figures showed Japan's jobless rate fell to its lowest point since 2007, the year before the global financial crisis.

The results are good news for a policy drive under Prime Minister Shinzo Abe, dubbed Abenomics, which is aimed at reversing falling prices and tepid growth. But the inflation jump was largely due to Japan's rising post-Fukushima energy costs.

Expensive fossil-fuel imports surged after the 2011 atomic disaster, which forced the shutdown of the nation's nuclear reactors.

The rising prices come as Japanese consumers brace for a tax rise next week, the country's first since the late 1990s. 

February's headline inflation figure was in line with the Bank of Japan's view that the core consumer prices index will stay around 1.3% over spring and summer, underpinned by inflation expectations, and then pick up its pace of growth after that.

The central bank dramatically stepped up its monetary easing a year ago, flooding Japan's economy with ever more cash in a bid to beat deflation and bring about two percent inflation by spring next year.

It has since pledged repeatedly to unleash further measures if it becomes clear the current policy is not enough to hit the target.