TOKYO: Japan’s annual core consumer inflation slowed for fourth conventional month in November due to descending oil prices, highlighting the challenges the central bank faces in achieving its 2 percent inflation target.
The core consumer price index (CPI), which excludes volatile fresh food but includes oil products, rose 2.7 percent in November from a year earlier, government data showed on Friday.
Senior economist at SMBC Hiroshi Watanabe said while the economy is recovering falling oil prices and slowing inflation will force the Bank of Japan (BOJ) to ease policy further at some point next year.
Factory output unexpectedly fell and real wages marked the steepest drop in five years, underscoring the fragility of the recovery and dealing a blow to Premier Shinzo Abe’s stimulus policies aimed at pulling the economy out of stagnation.
Stripping out the effects of a sales tax hike in April, core consumer inflation was 0.7 percent, slowing from 0.9 percent in October and far below the Bank of Japan’s 2 percent target.
In a worrying sign for the central bank, inflation linked government bond prices JP00190083=MUFG slumped over the past several weeks as investors’ inflation expectations hit their lowest since Haruhiko Kuroda became BOJ governor in March 2013.
