Japan's core inflation rate has cooled for the second month in a row, but it still remains above the Bank of Japan's 2% inflation target. The recent depreciation of the yen has intensified people's concern about the possible persistence of cost driven inflation pressure.
On Friday, the Ministry of the Interior of Japan announced the April price index, which generally met expectations.
In April, CPI rose 2.5% year on year, and is expected to rise 2.4%.
In April, core CPI rose 2.2% year on year, in line with market expectations.
In April, the CPI excluding fresh food and energy rose 2.4% year on year, in line with market expectations.
Among them, core CPI has declined for two consecutive months, but still remains above the Bank of Japan's inflation target of 2%.
Image source: Investing.com
With the beginning of the new fiscal year in April, many companies will take the opportunity to adjust the prices of products and services. Japanese enterprises increasingly need to weigh whether to raise prices to pass on the rising costs caused by the depreciation of the yen.
According to the estimates of analysts from NLI Research Institute, the impact of price adjustment measures on Japan's inflation rate is much smaller, and the impact on price increases is about 0.1%.
Some analysts believe that the current inflation data is unlikely to shake the Bank of Japan's determination to achieve policy normalization. The Bank of Japan is confident to maintain the benign wage price cycle and steadily increase inflation in the future.
Bank of Japan officials also increasingly pointed out the risk of early interest rate hikes. Even after the Japanese government suspected of intervening twice earlier to support the yen exchange rate, the yen exchange rate remained near a 34 year low.
Bank of Japan Governor Yoshio Ueda said on Thursday that the bad start of the Japanese economy this year will not make the central bank deviate from the track of interest rate increase. So far, the pace of economic recovery is within expectations, and the overall situation has not changed.
The Bank of Japan has always emphasized that the price of the service industry is the key factor for interest rate policy consideration. The price of the service industry in April rose 1.7% year on year, slower than the 2.1% in March.
Although consumer spending is still weak, due to the continuous decline in real wages, the consumer propensity of shoppers has been reduced, and household spending has declined for 13 consecutive months.
Japan's GDP shrank in the first quarter of this year, with zero or negative growth for three consecutive quarters. The key factor affecting GDP contraction is personal expenditure, which has declined for the fourth consecutive quarter.
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