SYDNEY — Here’s something you don’t hear every day: there are signs of inflationary pressures in Japan.
Data from the Japanese government shows consumer price inflation (CPI), excluding fresh food prices, rose by 0.4% in the 12 months to May, hitting the highest level since March 2015.
The figure was in line with market expectations but higher than than the 0.3% pace recorded in April.
Although a positive sign, the annual increase is still well below the 2.0% level targeted by the Bank of Japan (BoJ).
And given weakness in other price measures released this morning, the rebound in inflationary pressures may be already running out of steam.
So-called core-core CPI, excluding fresh food and energy prices and more akin to inflation readings targeted by other major central banks, came in flat over the year, unchanged from the level reported previously.
And core CPI in Tokyo, released one month ahead of the national figure, was also unchanged in the year to June, missing expectations for an increase of 0.2%.
It was also below the 0.1% increase reported in May.
Core-core CPI in the capital also fell, declining 0.2%.
As a lead indicator for the national figure, that suggests the recent acceleration in price pressures across the country may slow or even reverse in June when the government releases that data in one month’s time.
Of the other data released today, there was mixed news on the labour market, household spending and industrial output.
The national unemployment rate spiked unexpectedly in May, rising to 3.1% from 2.8% in April. That missed forecasts for an unchanged reading and was the highest level since December last year.
However, the jobs-to-applicants ratio — simply derived by dividing the number of jobs available to job seekers — continued to soar, rising to 1.49 from 1.48 in April.
It current stands at the highest level since February 1974. Clearly it’s a good time to be looking for work.
Elsewhere, household spending fell by 0.1% in the year to May, an improvement on the 1.4% contraction reported in April. It also topped expectations for a smaller decline of 0.6%.
Industrial production produced the opposite outcome, sliding by 3.3% in May. While an ugly headline result, it followed an even larger 4% increase in April. Markets had been expecting a decline of 3.2%.
Looking ahead, manufacturers indicated that they expect production to rebound 2.8% in June before falling 0.1% in July.
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