BOJ Inflation Gauge Grinds to a Halt

The Bank of Japan’s key inflation gauge ground to a halt as consumer spending slumped, highlighting weakness in the nation’s recovery from recession.  Consumer prices excluding fresh food rose 2 percent in February from a year earlier, less than a median estimate of 2.1 percent. The central bank’s measure that strips out last year’s sales-tax increase showed inflation at zero.

Declines in household spending and retail sales, even as the labor market tightens and prospects for wage gains improve, indicate the lingering effect of an increase in the sales tax last year. While BOJ Governor Haruhiko Kuroda has said that any drop in prices will be temporary and won’t stop the bank reaching its 2 percent target, economists surveyed by Bloomberg expect an extra dose of monetary stimulus by October.

“Households are still suffering from that sales-tax hike from last April,” Takuji Okubo, an economist who founded Japan Macro Advisors in Tokyo, said in a Bloomberg Television interview. “This is again bad news for the Japanese economy,” he said of the spending figures.

Bloomberg

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.