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[TOKYO] Japan's core consumer inflation edged up slightly in March as oil costs stabilised but analysts expect prices to slide in coming months, keeping alive expectations that the central bank will expand monetary stimulus later this year.
However, the Bank of Japan will be pleased by separate data showing the jobless rate fell and household spending rose in March from the previous month, which supports its view that rising wages will gradually lift consumption and keep the economy on a moderate recovery path.
The slew of data came after the BOJ, as widely expected, kept monetary policy steady and blamed a cut in its inflation forecast on lower costs of oil.
Stripping out the effect of last year's tax hike, core consumer price index (CPI) - excluding volatile fresh food but including oil products - rose an annual 0.2 per cent in March, data by the Internal Affairs ministry showed on Friday.
That followed flat growth in February, which was the first time core consumer inflation stopped rising in nearly two years.
Including the effect of the tax hike, core CPI rose 2.2 per cent, roughly in line with a median market forecast for a 2.1 per cent increase.
The jobless rate fell to 3.4 per cent in March from 3.5 per cent in February, separate data showed.
Household spending rose 2.4 per cent in March from the previous month, more than a median market forecast of a 0.5 per cent increase.
Japan is emerging from recession but at a snail's pace, as companies remain wary of ramping up spending despite record profits and consumers keep their purse strings tight.
That has put to test the central bank's pledge to accelerate inflation to 2 per cent through aggressive money printing. Its expansionary drive has so far had patchy success in a sign of the daunting task at hand as Japan tries to escape 15 years of deflation.