• Kyodo


Consumer prices in Tokyo increased 0.1 percent in May from a year earlier for the first upturn in more than four years, due to rising energy and television prices, the government said Friday, suggesting the nation could climb out of deflation in the coming months.

The national core consumer price index, excluding fresh foods, fell 0.4 percent in April from a year earlier for the sixth straight months of decline, due partly to a continued drop in durable goods prices, showing the economy is still affected by deflation. The decline was smaller than a 0.5 percent drop in April.

The nationwide core CPI stood at 99.8 against the 2010 base of 100, the Internal Affairs and Communications Ministry said. The core CPI for Tokyo’s 23 wards, an indicator of nationwide price movement, increased to 99.2 in May, rising for the first time since March 2009.

The rise in Tokyo’s CPI came as electricity prices climbed 13.7 from a year earlier and gas prices increased 4.3 percent. TV prices moved up 0.9 percent in May against a 23.1 percent drop in April, showing the first gain since records began in January 2006.

The nationwide CPI “is likely to enter positive territory in June” as it will be pushed up by energy prices, said Masahiko Hashimoto, an economist at Daiwa Institute of Research, expressing a view that the index is expected to follow the Tokyo trend.

Starting in June, the index is expected to move around zero percent for a while, influenced by energy prices, he said.

The CPI is likely to stay out of negative territory in line with an economic recovery, he added.

But he also indicated that the Bank of Japan’s goal of achieving its 2 percent inflation target in two years remains “difficult,” given recent price developments.

As for the nationwide CPI, declining TV prices, which fell 16.4 percent in April, continued pressuring overall prices. Prices of other durable goods, including air conditioners and Blu-ray recorders, also decreased.

Energy prices helped limit the decline, with electricity prices rising 4.2 percent and gas prices gaining 1.3 percent.

Meanwhile, separate data showed that average monthly household spending increased an inflation-adjusted 1.5 percent from a year earlier to ¥304,382 for the fourth straight monthly gain, lifted by increased housing-related spending and food consumption.

Among notable developments, spending for dining out climbed 3.3 percent from a year earlier, probably reflecting improvement in consumer sentiment, which is also likely to have increased spending in accommodations and package tours.

The ministry left its basic assessment unchanged from the previous month, saying household spending is “picking up.”

The income of salaried households rose 2.9 percent to an average of ¥479,854, increasing for the second month in a row. Household spending is a key indicator of private consumption, which accounts for about 60 percent of gross domestic product.

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