Business / Economy

Japan's inflation slows to 29-month low in September on falling oil prices

Kyodo

Japan’s core consumer prices rose 0.3 percent in September from a year earlier, with the pace of growth slowing to a 29-month low due to lower crude oil prices, government data showed Friday.

The nationwide core consumer price index, which excludes volatile fresh food prices, increased for the 33rd straight month after a 0.5 percent rise in August, but September’s CPI growth was the weakest since April 2017, the Internal Affairs and Communications Ministry said.

Gasoline prices dropped 6.9 percent in September from a year earlier for the fourth straight month of decline, while kerosene prices lost 2.6 percent and city gas prices dipped 0.3 percent.

“Inflation has been weakening due to lower oil prices, but the moderate rising trend in prices has been maintained,” a ministry official said.

Lower crude oil prices, the main factor pushing down consumer prices, reflect sluggish demand due to the slowing global economy, the official said, adding that the ministry will closely watch developments.

“The decelerating global economy and slowdown in household income gains this year apparently weighed on the pace of inflation growth,” said Takeshi Minami, chief economist at the Norinchukin Research Institute.

Inflation has remained far below the Bank of Japan’s 2 percent price stability target.

BOJ Gov. Haruhiko Kuroda has reiterated that the central bank will take additional easing measures without hesitation if momentum toward achieving the inflation target is lost.

The next BOJ policy-setting meeting is slated for Oct. 30 to 31.

In the reporting month, mobile phone fees slipped 5.2 percent as major wireless carriers lowered charges under pressure from the government, which had claimed the fees were too high compared with other countries.

Prices for overseas package tours fell 2.8 percent, reflecting relatively high prices a year earlier, the official said.

Vacuum cleaner prices surged 33.3 percent as electric appliance makers started selling their latest models in September, while ice cream prices rose 7.6 percent due to higher raw material and personnel costs.

Looking ahead, economist Minami said a free preschool education program launched by the government on Oct. 1 would put further pressure on the core CPI, and possibly send it to near zero percent when the effects of the 2 percentage-point consumption tax hike, introduced the same day, are excluded.

So-called core-core consumer prices, which exclude both fresh food and energy-related items, rose 0.5 percent, slowing from 0.6 percent growth in August.

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