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Japan’s core consumer prices saw a third straight month of inflation in March – albeit at the same marginal pace – while contraction in household spending moderated and unemployment remained steady.
Japan’s core consumer price index, which excludes the cost of fresh food, rose 0.2 per cent year on year in March, according to Japan’s Statistics Bureau. That was the third consecutive month of growth for the gauge after 12 months of contraction and hit exactly a median forecast from economists polled by Reuters.
But consumer prices excluding both food and energy costs contracted 0.1 per cent (compared to 0.1 per cent growth in January) where economists had expected prices to remain flat, while the headline CPI ticked lower to 0.3 per cent (0.3 per cent in January).
The lack of further improvement in the core gauge of consumer inflation and deterioration for other measures will be greeted with concern by the Bank of Japan, which on Thursday kept monetary policy on hold as it sought to avoid speculation about an early exit from stimulus and keep inflation moving towards its 2 per cent goal.
In its comments on Thursday the central bank remained hopeful that prices are “likely to continue on an uptrend and increase toward 2 per cent, mainly on the back of an improvement in the output gap and a rise in medium- to long-term inflation expectations.”
Data on household expenditures showed less improvement than expected, with overall household spending contracting 1.3 per cent year on year in March. That is a marked improvement from February’s fall of 3.8 per cent, but comes up short against a median forecast predicting a drop of just 0.3 per cent and represents a thirteenth straight month of lower spending.
Japan’s jobless rate held steady at February’s level of 2.8 per cent, the lowest level since June 1994. The job-to-applicant ratio, however, inched higher to 1.45 from at the previous month’s level of 1.43, marking the highest level since 1974.