Consumer inflation in Japan’s capital exceeds BOJ goal for 8th month

CORE consumer prices in Japan’s capital, a leading indicator of nationwide trends, rose 4.3 per cent in January from a year earlier, government data showed on Friday, exceeding the central bank’s 2 per cent target for an eighth straight month.

The increase, which was driven mostly by food and fuel bills but spread to a broader range of goods, will likely keep the Bank of Japan (BOJ) under pressure to phase out its massive stimulus programme, analysts say.

The rise in the Tokyo core consumer price index (CPI), which excludes fresh food but includes fuel, exceeded a median market forecast for a 4.2 per cent gain and marked the fastest year-on-year incease since May 1981. It followed a 3.9 per cent rise in December.

The Tokyo core-core CPI index, which excludes fuel as well as fresh food, was 3.0 per cent higher in January than a year earlier, picking up from December’s 2.7 per cent annual gain.

The BOJ kept monetary policy ultra-loose this month but raised its inflation forecasts in fresh quarterly projections, as companies continued to pass on higher raw material costs to households.

BOJ Governor Haruhiko Kuroda, whose term will end in April, has stressed the need to keep monetary policy ultra-loose until wages rise more, changing the recent cost-push inflation into inflation driven by robust domestic demand. REUTERS