Japan inflation edges up to 1% in September

[TOKYO] Prices in Japan inched up by one percent in September, according to government data published Friday, as the world's third-largest economy continues its years-long struggle with deflation.

Inflation stood at one percent year-on-year in September, the first time it had reached that level since February, but still only halfway to the Bank of Japan's two-per cent target.

The latest figure was in line with market consensus, and slightly higher than the 0.9 per cent registered in August.

With fresh food and energy stripped out, prices rose by even less - just 0.4 per cent year-on-year in September, unchanged from August, the internal affairs ministry said.

Japan has battled deflation for many years and the central bank's ultra-loose monetary policy appears to have had limited impact.

The Bank of Japan will not raise interest rates "for an extended period of time", its chief said after the latest rate-setting meeting, even as US and European peers tighten monetary policy.

Deflation is bad for the economy partly because the expectation of falling prices discourages spending and dampens growth.

The latest data come just days after Prime Minister Shinzo Abe announced a much anticipated sales tax hike in 2019, fending off fears it could derail the fragile economy.

Analysts say a rise in household income, along with the tax hike and modest inflation, is key to keep the country's economy in good shape.

AFP