TOKYO: Japan’s core consumer inflation was expected to be flat in November from a year earlier, a Reuters poll found, but recent further declines in oil prices suggest a long struggle ahead for the Bank of Japan to meet its 2 percent inflation target.
The core consumer price index (CPI), which includes oil products but excludes volatile fresh food prices, was expected to be unchanged in November from a year earlier, from a 0.1 percent fall the previous month, the poll of 21 analysts found.
“It will likely take longer than we had previously expected before we see core CPI rising steadily, because the pace of falls in oil prices has accelerated recently,” said Shuji Tonouchi, senior market economist at Mitsubishi UFJ Morgan Stanley.
Household spending was expected to show a fall of 2.4 percent in November from a year earlier, the poll found, which would be down for a third straight month. “Sales of items such as home electronics and cars are not so strong. I think consumers are tending to refrain from spending because food prices have risen, although the rate of increase has stabilized,” Tonouchi said.
On the bright side, the jobs-to-applicants ratio was seen at 1.25 in November, which would be the same level seen in January 1992 and the highest reading since December 1991 when the ratio was 1.31. The unemployment rate was estimated at 3.2 percent in November, slightly up from 3.1 percent the previous month, the poll showed.
The BOJ’s quarterly tankan business sentiment survey showed this month labor market tightened further versus the previous quarter, suggesting the jobs market could improve. The internal affairs ministry will announce consumer inflation data, jobless rate and household spending at 8:30 a.m. on Dec. 25 (2330 GMT Dec. 24).
The BOJ on Friday maintained its money printing drive at the current rate but reorganized its massive stimulus program to advance premier Shinzo Abe’s plans to prod reticent companies into boosting wages and investment. Japan dodged recession in July-September but the government wants firms to raise pay and boost capital spending to help spur economic growth.
