Japan Consumer Prices Rise 3.1% in August

Japan’s consumer prices rose 3.1 percent in August from a year earlier for the 15th straight month of increase, but the rate slowed from the preceding several months, the government said Friday.

The core consumer price index, which excludes volatile fresh food prices, stood at 103.5 in August against the 2010 base of 100, the Ministry of Internal Affairs and Communications said.

The rise was nearly in line with market forecasts. But it was lower than the range of from 3.2 percent to 3.4 percent in the previous four months which reflected the impact of the consumption tax increase in April.

The lower rise comes in the midst of the Bank of Japan’s drive to lift prices through drastic monetary easing, as Prime Minister Shinzo Abe vowed to move the economy out of more than a decade of deflation to return to a healthy growth track.

The central bank aims to raise Japan’s inflation rate to 2 percent excluding the effect of the consumption tax increase by sometime next year. It has estimated that the tax hike from 5 percent to 8 percent has pushed the rate up by about 2 percentage points.

A ministry official shrugged off a view that the inflation rate has peaked.

The year-on-year rise in the index could be suppressed again next month but that is simply because the year-earlier price levels were relatively high due to an increase in energy costs until September last year, the official said.

The BOJ expects the price upswing to pick up from October once the effect of the relatively high prices last year starts to fade.

via Mainichi

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza