TOKYO: Japanese consumer inflation stuck at zero in February for the second straight month, marking another blow to Prime Minister Shinzo Abe’s struggle to end nagging deflation. Abe came to power in December 2012 vowing to reverse the prolonged and debilitating decline in consumer prices that has plagued Japan’s economy on and off for years.
Bank of Japan Governor Haruhiko Kuroda has used unconventional tools, including massive buying of government bonds and, since January, a negative interest rate, in efforts to boost prices and spur the world’s third-largest economy.
But Friday’s data offered fresh evidence of the challenges faced by the government and BoJ, which says its forecast 2.0 percent inflation rate will not now be reached until next year. It originally said this would happen in 2015.
The Internal Affairs Ministry announced that core consumer prices, which exclude volatile fresh food prices, were unchanged in February from a year ago. The data came on the heels of the same number in January, and rises of 0.1 percent in both December and November.
Falling energy prices, coupled with a higher yen driving down the cost of imports, have continued to weigh on core consumer prices. Junichi Makino, chief economist at SMBC Nikko Securities, said worse news was ahead, with prices likely to fall.
“Prices of food… and energy were all weak,” Makino wrote in a report. “It is difficult to expect sustained price increases in the immediate future,” he added, stressing the weakness of Japan’s overall economy, which contracted during the final three months of last year.
