Japanese inflationary pressures edged higher in April, but still remain incredibly low

Photo: Damon Coulter/Barcroft Images/Barcroft Media/Getty Images

Inflationary pressures in Japan lifted fractionally in April, registering the fastest year-on-year increase in over two years.

According to data released by the government on Friday, consumer price inflation (CPI) grew by 0.4% in the 12 months to April, higher than the 0.2% level reported in March and the fastest pace since March 2015.

Like the increase in the headline rate, core inflation — of most importance to the Bank of Japan when it comes to monetary policy settings — also accelerated from the levels reported in March.

Excluding fresh food prices, the government said CPI grew by 0.3% from a year earlier, up from 0.2% in March, but below the 0.4% lift expected.

So-called core-core CPI — a measure on price pressures that excludes movements in energy and fresh food prices — was weaker, failing to grow over the past 12 months.

While up on the 0.1% decline reported in March, it remains well below the 2% level targeted by the Bank of Japan.

Hinting that core inflationary pressures may edge higher when May’s figures are released in late June, core CPI in Tokyo — released one month ahead of the national figure — edged higher, increasing by 0.1%, up from the 0.1% decline reported in April.

Still, a very weak outcome, and one that ensures the Bank of Japan will continue with its aggressive monetary policy easing program.

The bank has pledged to continue with its quantitative and qualitative easing (QQE) with yield curve control program — involving the purchase of around 80 trillion yen in government bonds per annum — for as long as it is necessary to achieve its inflation target of 2%.

While other areas of the Japanese economy appear to be improving — GDP growth exceeded expectations in the March quarter — inflation remains one area that policymakers are having no success in mustering.

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