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Japan's inflation slows more than forecast

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Japan's inflation rate slowed more than forecast in December, adding to central bank chief Haruhiko Kuroda's challenges in reflating the world's third-biggest economy.

[TOKYO] Japan's inflation rate slowed more than forecast in December, adding to central bank chief Haruhiko Kuroda's challenges in reflating the world's third-biggest economy.

Consumer prices excluding fresh food rose 2.5 per cent from a year earlier, the statistics bureau said Friday in Tokyo. That was less than the median projection of 2.6 per cent in a Bloomberg News survey of economists. Stripped of the effect of sales-tax increase last April, core inflation - the Bank of Japan's key measure - was 0.5 per cent.

The slide in oil could cause inflation to slow in coming months before helping boost growth and stoking price pressures in the longer term, Kuroda said last week after the Bank of Japan lowered its forecast for the year from April. The BOJ will adjust its monetary stimulus to keep inflation headed toward its 2 percent goal if expectations for price gains among companies and consumers deteriorate, Kuroda said.

"The BOJ is in a wait-and-see mode for a while," Yoshiki Shinke, an economist at Dai-ichi Life Research Institute, said before the report. "Inflation will keep slowing until it hits bottom around July or August. It seems to be a question of how and when the BOJ will admit inflation is off its path."

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