Energy costs nudge Japan inflation up to 0.3 percent

Bloomberg

Japan’s core consumer inflation gauge rose for a fourth month in April, the longest run of gains since mid-2015, but it’s far below target and weak underlying price pressures point to limited gains ahead.
Highlights of CPI report Consumer prices excluding fresh food increased 0.3 percent in April from a year earlier, the fastest pace since April 2015 (estimate 0.4 percent). Excluding fresh food and energy, prices were flat at 0.0 percent.
(estimate 0.0 percent). Overall, prices climbed 0.4 percent (estimate 0.4 percent).
The figures for April offer some encouragement but remain distant from the 2 percent target and underscore that price gains are lagging behind modest growth in the economy, which has expanded for five straight quarters. Bank of Japan Governor Haruhiko Kuroda is pinning his hopes on rising energy costs, wage gains and the BOJ’s monetary stimulus program.
Former Federal Reserve Chairman Ben Bernanke said in Tokyo this week that the BOJ’s policy options are becoming scarce and more explicit cooperation with the government would be appropriate if inflation remains weak.
“Prices are coming back but there is just no momentum,” said Yasuhiro Takahashi, economist at Nomura Securities Co., who said inflation data that excludes energy prices show “clear weakness.” “I used to think CPI would reach around 1 percent in 2017 but now chances are increasingly slim,” Takahashi said, partly because companies aren’t confident enough that consumers can withstand price increases in the absence of solid wage gains.
“With the boost from higher energy prices set to fizzle out in the second half of the year, inflation will settle at levels well below the BOJ’s 2 percent target,” Marcel Thieliant, senior Japan economist at Capital Economics in Singapore, wrote in a note after the release. “Wage growth remains far too weak to generate major cost pressures,” Thieliant said. “The upshot is that headline inflation is unlikely to rise much further from now on.”
Tokyo’s consumer prices excluding fresh food in May, an early indicator for how the national figure may develop, increased 0.1 percent (estimate 0.0 percent).