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Saturday, June 27, 2015, Ashar 13, 1422 BS, Ramadan 9, 1436 Hijr

Japan inflation tepid, spending up in May
Published : Saturday, 27 June, 2015,  Time : 12:00 AM,  View Count : 8

TOKYO, June 26:  Japanese inflation remained tepid while spending rose after 13 months of falls, official data showed Friday, with analysts predicting more easing ahead as the central bank tries again to build up a head of steam.
Core inflation, excluding volatile fresh food prices, was up 0.1 per cent year-on-year, beating market expectations for zero growth but coming still well short of the Bank of Japan's 2.0 per cent target.
Lower fuel prices and other energy costs helped curb inflation, data from the internal affairs ministry showed.
Separate data from the internal affairs ministry showed household spending rose 4.8 per cent on-year in May, posting the first rise since Japan hiked sales taxes in April last year to help pay down a huge national debt.
But spending has not yet recovered to the pre-hike level and analysts were sticking to the view that the Bank of Japan will almost certainly be forced to expand its monetary easing scheme to jack up prices and counter a downturn in the economy.
The good news is that the jobs market is improving.
While the jobless rate was unchanged at an 18-year low of 3.3 per cent in May, the labour ministry said the ratio of job offers to job seekers rose to a 23-year high of 1.19, meaning there were 119 offers to every 100 applicants and suggesting even lower jobless rate in coming months.
"Unfortunately, though, there are scant signs that the tighter labour market has resulted in stronger price pressure," said Marcel Thieliant, economist at Capital Economics.
"The big picture remains that there is still substantial spare capacity in the economy which is dragging down prices," he said in a note.
Economists at SMBC Nikko Securities noted more and more housewives and senior people were joining the workforce.
"We should give heed to the fact that increasing labour supply is easing the tightening of the labour market and curbing wages," they said in a note.
"The BoJ's scenario of higher wages leading to home-made inflation is unlikely to happen," they said.
SMBC Nikko expected Japan's core consumer prices to fall as much as 0.8 per cent on-year by October due to drops in energy prices.    ?AFP

Editor : Iqbal Sobhan Chowdhury
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