©Reuters. A woman looks at items at a shop in Tokyo, Japan, March 24, 2023. REUTERS/Androniki Christodoulou
By Tetsushi Kajimoto and Takahiko Wada
TOKYO (Reuters) – Core consumer inflation in Japan slowed for a third straight month in January but beat forecasts and remained at the central bank’s 2% target, keeping alive expectations of an end to negative interest rates by April.
The 2.0% increase beat average market forecasts for a 1.8% increase, data from the Ministry of Internal Affairs and Communications showed on Tuesday, underscoring the view that falling inflation Cost pressure from raw material imports could ease the pain of rising costs of living.
However, stable inflation also reaffirms expectations that big companies will offer big pay rises at management-worker pay talks on March 13, paving the way for an end to negative interest rates as early as March or April.
Japan’s main consumer price index, which includes petroleum products but excludes fresh food prices, compared with economists’ median estimate of an annual increase of 1.8%.
The slowdown is partly due to a sharp decline in energy costs, reflecting the base effect of last year’s sharp increase and government subsidies aimed at curbing gasoline and utility bills, in a sign of easing cost pressure that had maintained core inflation at or above. Bank of Japan’s 2% target from April 2022.
Looking ahead, the key is whether wage increases will beat inflation enough to give families purchasing power, so that companies can continue to pass on costs and keep inflation sustainably at the 2% target. of the BOJ, analysts say.
The so-called “core core” index, which excludes both fresh food and energy prices, closely watched by the BOJ as a narrow indicator of broader price trends, rose 3.5% year-on-year to January, after an increase of 3.7%. in December.