Inflation in Japan has entered the positive territory for the first time in 14 months, as rising commodity costs have led to higher prices for gasoline in pumps, according to data released Friday before the central bank’s decision.
According to the Ministry of Foreign Affairs, consumer prices, excluding fresh food, rose 0.1% year-on-year due to a 20% rise in gasoline prices. Economists expected flat prices overall.
The Bank of Japan is likely to see even the slightest rise in inflation positively, but price momentum is far less than in the United States and other countries where central banks are beginning to predict potential rate hikes. ..
The Bank of Japan predicts that inflation will be below its target of 2% for the foreseeable future. So that main stimulus will probably be maintained for the next few years.
“In the past, even if inflation was 2% in other countries, deflationary pressures have continued in Japan, and that trend will probably continue,” said Takeshi Minami, an economist at the Kitabayashi Chukin Research Institute. It was. “Japanese consumers stop buying when prices go up.”
The Bank of Japan is expected to withstand negative interest rates and asset purchases later on Friday, tinkering with toolkit margins by boosting the expiration of its pandemic-era corporate lending program.
Despite domestic vaccination rates accelerating in recent weeks and infections declining, a complete revival of personal consumption is still on the way.
Some business restrictions will be enforced after Japan finishes the latest emergency in all regions except Okinawa this weekend.
The slump in prices has been exacerbated by several special factors, including the reduction in mobile phone charges advocated by Prime Minister Yoshihide Suga. Consumer prices could rise by 0.5% or 0.6%, excluding the impact of cheaper mobile plans, Minami said.
Yuki Masushima, an economist at Bloomberg Economics, said, “Assuming that the state of emergency ends on June 20, as planned, core inflation (excluding fresh food) is expected to return to 0% year-on-year in June. I’m doing it. ” “Beyond that, stagnant demand and rising energy prices could raise core inflation to 0.2% in the third quarter.”
Excluding fresh food and energy, consumer prices fell 0.2% year-on-year, compared to -0.3% forecast by economists.
Overall inflation fell 0.1% year-on-year. Analysts predicted -0.2%.
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