Japan's Inflation Creeps Up Again, Fueled by Energy Prices
Bloomberg
Published Oct 18, 2018 20:45
Updated Oct 19, 2018 00:00
Japan's Inflation Creeps Up Again, Fueled by Energy Prices
(Bloomberg) -- Japan’s key inflation gauge edged up in September, bringing the Bank of Japan back to the halfway point toward its price target, though gains are still largely limited to energy.
Key Takeaways
The acceleration in Japan’s inflation backs up Governor Haruhiko Kuroda’s decision Thursday to upgrade his assessment of the current strength of price growth to around 1 percent from a range of 0.5 percent to 1 percent. Yet the renewed momentum still leaves the BOJ a long way from its inflation goal and still reliant on higher energy prices to pull up the overall index. As Kuroda said in a Bloomberg interview last week, the critical element needed to drive inflation toward 2 percent is higher pay that can fuel consumption.
Economist Views
- The breakdown of the data shows that energy prices are still contributing greatly to the gains in CPI, said Kengo Tanahashi, an economist at Nomura Securities. As crude prices rose quite a bit in September and October, energy could keep pushing inflation for some time, he added.
- Consumer spending was firmer in the April-June quarter, but still isn’t showing fundamentally strong growth, Tanahashi said. "Unless spending becomes more fixed around these levels it’s difficult for price hikes to gain more momentum," he said.
- Looking at the latest data showing that prices excluding energy and fresh food are still only rising 0.4 percent, it’s too early for the BOJ to be thinking about an exit strategy, Takuji Okubo, chief economist at Japan Macro Advisors, said on Bloomberg Television.
- Still, the central bank could eventually achieve its goal, he said. "Over time, as unemployment goes down, there has to be a wage pressure so I do think 2 percent inflation will happen if the Japanese economy keeps growing and the Bank of Japan keeps the current aggressive easing policy," he said.
Other details
- Energy prices rose 8.1 percent from a year earlier, boosting overall price growth by 0.6 percentage point.
(Updates economist comments. The headline of an earlier version of this story was corrected.)
Get The App
Written By: Bloomberg
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.