Japan’s nationwide core consumer price index rose 3.3 percent in July but remained far below the central bank’s 2 percent inflation target when excluding the effect of the April tax hike.
The 3.3 percent rise was in line with Reuters’ forecast and unchanged from June’s reading. However, when excluding the effect of the April tax hike core inflation stood at 1.3 percent in July, below the inflation target that the Bank of Japan (BOJ) pledged to meet sometime next year.
“The inflation that you’re getting is just a rise in price levels associated with that tax increase so this is not really the desirable inflation that you want,” said Paul Sheard, chief global economist at Standard & Poor’s.”In fact, it’s kind of counter-productive [in the sense that] it just eats into real purchasing power and creates a bit of a headwind for the recovery.”
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