Japan consumer inflation tepid, spending down in June

[TOKYO] Japanese inflation remained tepid in June while household spending suffered a surprise drop, official data showed on Friday, likely reinforcing the market's belief that the country's central bank will ease monetary policy again.

Core inflation, excluding volatile fresh food prices, was up 0.1 per cent year-on-year, the internal affairs ministry said, well short of the Bank of Japan's 2.0 per cent target.

Lower fuel prices and other energy costs helped curb inflation, the data showed.

A separate report from the internal affairs ministry showed household spending fell 2.0 per cent in June against market expectations that family spending would keep increasing after a rise of 4.8 per cent in May.

The May increase was the first rise since Japan hiked sales taxes in April last year to help pay down a huge national debt.

The sales tax hike, Japan's first in 17 years, slammed the brakes on consumer spending.

Economists have been convinced that the Bank of Japan will almost certainly be forced to expand its already huge monetary easing scheme to jack up prices and stoke growth in the world's third largest economy.

AFP