Inflation in Japan’s capital slows in November

CORE consumer inflation in Japan’s capital Tokyo, considered a leading indicator of nationwide trends, hit 2.3 per cent in November, slowing from the previous month in a sign of easing cost-push pressure in the world’s third-largest economy.

The data will be among factors scrutinised by the Bank of Japan (BOJ) when it meets for a two-day policy meeting concluding on Dec 19.

The year-on-year rise in the Tokyo core consumer price index, which excludes volatile fresh food but includes fuel costs, compared with a median market forecast for a 2.4 per cent gain and slowed sharply from a 2.7 per cent increase in October.

The rate of inflation matched a low in July last year as government subsidies pushed down fuel costs and price hikes for food moderated, the data showed.

The so-called “core core” index that strips away both fresh food and fuel prices – closely watched by the BOJ as a gauge of broader price trends – rose 3.6 per cent in November from a year earlier after a 3.8 per cent gain in October, government data showed on Tuesday (Dec 5).

Service prices rose 3 per cent in November from a year earlier, marking the fastest pace since 1994, suggesting that prospects of higher wages are prompting firms to pass on increasing labour costs.

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The data underscores the BOJ’s view that rising wages and service costs will replace cost-push inflation, and help Japan see inflation sustainably meet the bank’s 2 per cent target.

The BOJ remains a dovish outlier among global peers, having maintained ultra-loose policy even as major central banks elsewhere raised interest rates aggressively to fight rampant inflation.

With inflation having exceeded the BOJ’s 2 per cent inflation target for more than a year, many market players expect the bank to phase out its massive stimulus some time next year, with some betting on a shift as early as in January. REUTERS