Japanese inflationary pressures remain close to non-existent

Jack Atley/ALLSPORT

Japanese inflationary pressures remain incredibly weak, despite an in improvement in economic conditions.

According to figures released by the Japanese government, consumer price inflation (CPI) rose by 0.7% in the year to September, a result that was unchanged from August.

Core CPI, excluding fresh food prices and of more importance when it comes to the outlook for monetary policy settings from the Bank of Japan (BoJ), also rose by 0.7% over the year.

Core CPI, or underlying inflation, removes the impact of volatile movement in food prices.

While unchanged from the pace recorded a month earlier, it missed forecasts for an increase to 0.8%.

It remains well below the BoJ’s 2% annual inflation target. The BoJ has previously pledged to maintain ultra-easy monetary policy settings as long as it is necessary to achieve its inflation target in a stable manner.

On current form, it looks like the BoJ will be buying plenty of assets as part of its quantitative and qualitative easing (QQE) program for some time yet.

Suggesting that most of the increase in the core reading was due to higher energy prices, the so-called core-core rate — that which excludes both fresh food and energy prices — grew by just 0.2% over the year, unchanged from the pace of August.

Inflationary pressures in Tokyo, released one month ahead of the national figures, were also soft, falling 0.2% from 12 months earlier. That was a sharp turnaround on the 0.5% increase seen in September and suggests a similar outcome may occur when the nationwide figure is released in a months time.

Excluding fresh food and energy prices, core inflation in the capital grew by 0.1% in the year to October, a small improvement on the flat reading of September.

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