Japan’s consumer prices fell at a faster pace in March, underscoring the challenge facing Bank of Japan Governor Haruhiko Kuroda as he works to meet a 2 percent inflation target within two years.
Consumer prices excluding fresh food slid 0.5 percent last month from a year earlier, the statistics bureau said today in Tokyo. That’s the biggest decline in two years. The median estimate of 25 economists surveyed by Bloomberg News was for a 0.4 percent fall. Overall prices dropped 0.9 percent.
Today’s data show the difficulty the Bank of Japan faces in creating inflation after more than a decade of falling prices. The BOJ will today consider whether to raise its price forecast for the next two years to signal confidence it will reach its target, people familiar with the matter told Bloomberg News this month.
“It’s tough to achieve the price target in two years as 2 percent inflation is far, far away,” Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute in Tokyo, said before today’s report.
A reaction to last year’s “sharp” price increases in gasoline, kerosene, and other energy-related goods will probably mean Japan’s core consumer price index remains negative until at least April, Shinke said. Energy prices rose 5.7 percent in March and 5.3 percent in April last year, according to government data.
The decline in CPI in March was likely due to base effects linked to an increase in TV prices last year, Tokyo-based Barclays Plc analysts including Kyohei Morita said in a research report last week, forecasting prices will start to increase around July.