From the WSJ: The latest price data from Japan shows the nations efforts to reach a 2% inflation target appear to have hit a stumbling block. Core consumer prices in Tokyo, which exclude some fresh food, rose 2.7% in April from a year earlier in April. Most of this came from a sales-tax increase on April 1, which has pushed up the cost of many consumer goods. Stripping out the tax effect, prices rose only 1%, unchanged from the previous month. Nationwide core consumer prices in March, before the sales tax hike, rose 1.3% on year, unchanged for three months and below economists expectations for a 1.4% rise. That data, the BOJs preferred price gauge, also was released Friday. The data seems to bolster private economists skepticism the Bank of Japan will succeed in its target to push inflation to 2% in 2015. The BOJs massive monetary easing last year ended a yearslong run of falling prices, mainly through weakening the yen and pushing up import costs. That impetus appears to have run its course now the yen is stabilizing. If price rises moderate, firms could become less optimistic to invest and consumers to spend, worrying prices may again fall in the future. The economy is expected to contract in the second quarter due to the effects of the tax rise, before resuming growth later this year. The International Monetary Fund forecasts economic growth of 1.4% in 2014 before falling back to 1% in 2015. To keep the momentum going, many economists now believe the BOJ will have to offer a second round of monetary easing to stimulate consumer demand and investment and push prices toward its target.
Posted on: Fri, 25 Apr 2014 06:59:20 +0000
Trending Topics
Recently Viewed Topics
© 2015