A flurry of economic data released Friday revealed a mixed picture for Japan, suggesting the outlook remains challenging for the world’s third biggest economy which slipped into recession in the third quarter.
While consumer inflation slowed to its lowest level in a year in October, raising skepticism over the Bank of Japan’s (BOJ) ability to achieve its inflation target, industrial output and spending showed further signs of revival.
The nationwide core consumer price index (CPI) – which excludes volatile food prices – rose 2.9 percent in the month from a year ago. The figure was in line with a Reuters poll and follows a 3 percent rise in September.
However, adjusted for an increase in the sales tax hike that took effect in the second quarter, core consumer prices rose 0.9 percent on year, below September’s 1 percent rise and well below the 2 percent target the Bank of Japan (BOJ) aims to achieve by April 2015.
Industrial production rose 0.2 percent on month in October, above expectations for a 0.6 percent decline in a Reuters poll but down from September’s 2.7 percent increase. Meanwhile, retail sales rose 1.4 percent on year, above expectations for a 1.2 percent rise but slower than September’s 2.3 percent increase.
“I’m positively encouraged by the numbers,” said Alex Treves, head of Japanese equities at Fidelity Worldwide Investment.
“The first thing that pops into my head is that I’m very glad that [Japanese Prime Minister Shinzo] Abe has already announced he wants to defer the consumption tax increase because it might just have been possible that he would have used numbers like these to say: Let’s hike the consumption tax next year as planned. That would not have been the right thing,” he added.
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