Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Japan CPI inflation remains sticky in March as BOJ meeting looms

Published 21/04/2023, 10:00 am
Updated 21/04/2023, 10:00 am
© Reuters.

© Reuters.

By Ambar Warrick

Investing.com -- Japanese consumer price index inflation was unchanged in March from the prior month, remaining well above the Bank of Japan’s target range as government subsidies had a limited effect in bringing down price pressures.

National core consumer price index inflation, which excludes volatile items such as fresh food, rose 3.1% in the 12 months to March, data from the Statistics Bureau showed. The figure was in line with estimates that core inflation would remain steady from February.

Including fresh food prices, national CPI inflation grew 3.2% in March, in line with expectations for growth of 3.2% and slightly lower than the prior month’s reading of 3.3%.

The reading indicates that while government subsidies on electricity helped bring down inflation from an over 40-year peak of 4.2%, the rising cost of most other amenities still kept inflation well above the Bank of Japan’s 2% target rate.

Food prices continued to trend higher, as did prices of gas and household goods.

Friday’s reading comes ahead of a Bank of Japan meeting next week, where the bank is widely expected to maintain its ultra-loose policy under new head Kazuo Ueda. But recent media reports signaled that the BOJ is open to tightening policy later this year if wage growth maintains its current momentum.

The BOJ also forecast a pick-up in inflation by mid-2023, as the effects of the government subsidies are baked into the economy. This is likely to push the bank into altering its yield curve control policy later in the year, with some analysts expecting an end to the policy.

High inflation has battered Japan’s economy since late-2022, as rising input costs saw local manufacturers cut output. Consumer discretionary spending also slowed due to a higher cost of living.

Commodity market disruptions caused by the Russia-Ukraine war, coupled with increased spending after the lifting of anti-COVID measures in mid-2022 were the biggest factors behind higher Japanese inflation.

A weak yen, due to a dovish BOJ, also factored into higher import prices.

But the BOJ has so far largely maintained its ultra-accommodative stance, citing the need to support economic growth after nearly three years of COVID-driven disruptions.

Japanese manufacturers also have to cope with a slowdown in overseas demand for goods, amid worsening economic conditions across the globe.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.