TOKYO: Prices fell slightly in Japan for the third month in a row in October, indicating that sustained inflation still remains elusive in the world’s third-largest economy despite the central bank’s efforts to spark price growth.
The core consumer price index, which excludes fresh food, fell 0.1% from a year earlier, government data showed Friday, matching economists’ forecasts.
The last time prices fell three months in a row was in 2013, the same year the Bank of Japan set a 2% inflation target and announced its massive asset-purchase program aimed at ending more than a decade of on-and-off deflation.
The figures show the BOJ is in the same boat as central banks in the U.S., Europe and Australia in facing persistently below-target inflation amid lower commodity and fuel prices. Some economists have forecast that flatlining inflation may force the bank and some of its peers to ease again.
The BOJ has said lower imported energy prices mask an improving inflation picture. Excluding energy prices and food, prices actually rose 0.7% on year, though that was lower than the 0.9% rise in September. The bank is scheduled to release its own CPI figure on Friday afternoon, which is also likely to show a positive reading. The bank’s gauge excludes fresh food and energy.
“The price trend is steadily improving, and inflation is likely to head toward 2% as the impact of the fall in oil prices dissipates,” BOJ Gov. Haruhiko Kuroda said at the end of the October, when the bank stood pat on policy despite pushing back its timeframe for achieving its inflation goal.
The fall in overall inflation has shown little sign of encouraging consumers to open their wallets more, judging by the latest spending data. Spending among all households was down 2.4% on year in October as households spent less on clothing, medicine and education. Economists say that consumption will continue to be sluggish as employers remain reluctant to significantly increase wages.
Both the bank and Prime Minister Shinzo have said that higher wages will be necessary to lift inflation and growth in Japan. Japan’s largest labor union umbrella organization says it will demand a 2% rise in base pay during wage negotiations next spring.
One bright spot in Friday’s data was a fall in Japan’s jobless rate to 3.1% in October from 3.4%. The jobs-to-applicants ratio was unchanged at 1.24, showing that 124 jobs were available for every 100 job seekers applying for work.
