Business / Economy

Core consumer prices in Japan rose 0.8% on year in May

Kyodo

Core consumer prices rose 0.8 percent in May, due to higher energy costs, but the year-on-year gain slowed from the previous month despite the Bank of Japan’s 2 percent inflation target, government data shows.

The nationwide core consumer price index, which excludes volatile fresh food prices, increased for the 29th straight month, according to the Internal Affairs and Communications Ministry. It rose 0.9 percent in April.

Prices have picked up in recent months due partly to rising energy costs, but the BOJ faces an uphill battle in achieving its inflation target and estimates the rate will remain under 2 percent in coming years.

On Thursday, after a two-day policy-setting meeting, BOJ Gov. Haruhiko Kuroda said that the central bank will consider additional easing measures without hesitation if inflation loses momentum.

In May, electricity costs rose 3.6 percent and city gas costs climbed 6.4 percent, reflecting higher crude oil prices, a ministry official said. Gasoline prices jumped 2.8 percent from a year earlier.

The price of air conditioners increased 14.1 percent as appliance makers unveiled new products to consumers earlier than usual this year, a ministry official said.

Prices for overseas package tours rose 6.6 percent from a year earlier due to relatively robust demand, but accommodation costs slid 0.2 percent after the 10-day Golden Week holiday through May 6 — extended this year to celebrate the imperial succession.

Mobile phone bills fell 4.3 percent and handset prices declined 10.6 percent, following greater government pressure on wireless carriers to lower charges and tougher competition to win customers.

Takeshi Minami, chief economist at Norinchukin Research Institute, said spending is “not so strong” due to disappointment with the pay hikes secured in this year’s annual management-labor negotiations, held in spring.

He added that the outlook is especially bleak after October, when the consumption tax is set to rise to 10 percent from 8 percent and preschool education will become free.