Japan’s consumer prices increased at the fastest pace since 2008 in July, adding to signs that Prime Minister Shinzo Abe is making progress in pulling the economy out of deflation.
Consumer prices excluding fresh food climbed 0.7 percent from a year earlier, the statistics bureau said today in Tokyo. That exceeded the median estimate of 29 analysts surveyed by Bloomberg for a 0.6 percent gain. Industrial output rose a less-than-forecast 3.2 percent from the previous month.
The faster increase in prices helps efforts by Abe to shake households’ deflationary mindsets as the Bank of Japan rolls out unprecedented easing after 15 years of falling prices. At the same time, challenges remain: the BOJ is still distant from a goal of generating 2 percent inflation and prices last month were partly pushed up by energy and imported-goods costs after a decline in the yen.
“Japan is moving into real inflation,” said Junko Nishioka, chief economist at Royal Bank of Scotland Group Plc in Tokyo and a former Bank of Japan official. “Today’s data is encouraging for the BOJ, and they are likely to keep monetary policy on hold.”
The Nikkei 225 Stock Average jumped 1.2 percent as of 9:09 a.m. in Tokyo, heading for the biggest gain in five days. The yen fell 0.1 percent to 98.42 per dollar.
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