Japan's inflation slows toward zero as global price gap grows

[TOKYO] Japan's key inflation measure weakened last month in another sign that Japan's price dynamics are at odds with a global trend of rapid acceleration that is prompting central bank action overseas.

Growth in consumer prices excluding fresh food slowed to 0.2 per cent in January from a year earlier, compared with 0.5 per cent in the previous month, according to the Ministry of Internal Affairs and Communications on Friday (Feb 18).

Economists had expected a gain of 0.3 per cent as an earlier boost from higher hotel charges largely dropped out of the calculations.

The dent in price gains underscores Japan's status as an outlier amid global inflationary pressures and could cool recent speculation that the Bank of Japan (BOJ) might consider adjusting policy even before governor Haruhiko Kuroda finishes his term next year.

The BOJ chief has repeatedly reiterated his view that there is no need to discuss normalising policy with prices still so distant from a 2 per cent target.

The central bank underlined its commitment to stick with its stimulus framework earlier this week when it offered to buy government bonds at a fixed rate to keep yields below a ceiling.

Still, the speculation of possible changes is likely to rumble on as other central banks make hawkish pivots in their policy direction.

Prices in Japan are also expected to jump in April when the impact of slashed phone fees fades out of the index, another factor that will likely keep market players chattering. BLOOMBERG