Japan’s consumer prices
increased at the fastest pace since 2008 in July, adding to signs that
Prime Minister Shinzo Abe is making progress in pulling the economy out
of 15 years of deflation.
Consumer prices excluding fresh food climbed 0.7 percent from a year earlier, the statistics bureau said today in Tokyo. That exceeded the median estimate of 29 analysts surveyed by Bloomberg for a 0.6 percent gain. Industrial output rebounded a less-than-forecast 3.2 percent from the previous month when it fell the most since Japan’s record earthquake in March 2011.
The faster increase in prices helps efforts by Abe to shake households’ deflationary mindsets as the Bank of Japan rolls out unprecedented easing that helped spur a third straight quarter of growth. At the same time, challenges remain: the BOJ is still distant from a goal of generating 2 percent inflation and prices last month were partly pushed up by energy and imported-goods costs after a decline in the yen.
“Japan is moving into real inflation,” said Junko Nishioka, chief economist at Royal Bank of Scotland Group Plc in Tokyo and a former Bank of Japan official. “Today’s data is encouraging for the BOJ, and they are likely to keep monetary policy on hold.”
The Nikkei 225 Stock Average fell 0.1 percent as of 10:16 a.m. in Tokyo, erasing an earlier rise. The yen rose 0.1 percent to 98.23 per dollar. The yield on the benchmark 10-year Japanese government debt was unchanged at 10:15 a.m. in Tokyo.
Excluding energy and fresh food, prices fell 0.1 percent in July, slowing from a 0.2 percent decline in June, today’s report showed. It was the smallest drop since February 2009, and less than a median forecast for a 0.2 percent drop in a Bloomberg survey.
The jobless rate was 3.8 percent, a separate government report showed today.
A sales-tax increase planned for April threatens to damp the economy’s recovery even as it would help to shore up the nation’s finances. Bank of Japan Deputy Governor Kikuo Iwata this week called for patience, saying it would take more time for the central bank’s unprecedented monetary easing to trigger “persistent and steady pickups in prices and wages.”
The BOJ’s loosening is “in its early stages, and I hope you will be patient enough to see its effects permeate the economy,” he said.
The yen’s slide of about 20 percent against the dollar over the past year and the shutdown of almost all of the nation’s nuclear plants after a crisis in 2011 have contributed to the jump in the costs of imported goods and energy.
Wheat prices in Japan, which imports 60 percent of its food, will increase for the third time in a year on a weaker yen, with imports sold by the government to flour millers including Nisshin Seifun Group Inc. rising about 4.1 percent on average in October, the ministry of agriculture said on Aug. 28.
A maker of Japanese sake, Nihon Sakari Co., announced on Aug. 27 its first price increase in 19 years from October, citing rising prices raw material prices and higher logistical costs.
Oil rose to the highest level in two years this week on concern that a conflict in Syria may spread and threaten supply from the Middle East. Gasoline prices at home stayed at 160.2 yen ($1.64) per liter for a third straight week, the highest since October 2008, the trade ministry reported on Aug. 28.
“Price are rising, basically because of rising energy costs,” said Masamichi Adachi, a senior economist at JPMorgan Chase & Co. in Tokyo and a former BOJ official.
Abe has summoned 60 economists, business leaders and representatives of consumers to discuss this week whether to lift the sales tax. He will make a decision by early October, taking into account views of those people and economic data, including revised gross domestic product data for the second quarter on Sept. 9. Preliminary data showed annualized growth of 2.6% from the previous quarter.
The economy is moving in a positive direction in terms of being able to implement the sales-tax increase, Economic Minister Akira Amari told reporters in Tokyo today.
A higher levy would add to costs for households, even as income-growth remains stagnant, threatening to hurt consumer sentiment.
Wages (JNLSUCTL) fell or were unchanged in 10 of the 12 months through June, according to the Ministry of Health, Labour and Welfare. Consumer confidence fell for a second straight month in July as the ratio of those who expect prices to increase in a year rose to the highest level in almost five years, according to a Cabinet Office survey released on Aug. 9.
Even as Japan’s CPI rises, a market gauge of inflation expectations today suggested the BOJ will have a hard time achieving its target. Japan’s break-even rate, derived from the difference between government bond yields and those on inflation-linked debt, signaled inflation of 1.16 percent in the next five years, down from as high as 1.84 percent on May 15.
Elsewhere in Asia, South Korean industrial production unexpectedly fell 0.1 percent in July from the previous month, according to statement today from Statistics Korea. India’s GDP probably rose 4.6 percent in the three months through June from a year earlier, according to the median of 44 estimates in a survey.
Italian unemployment in July is forecast to rise to 12.2 percent, while the jobless rate in the European Union for the same period is expected to be unchanged, according to separate surveys by Bloomberg News.
Personal spending in the U.S. probably increased at a slower pace in July, while a University of Michigan confidence index probably rose in August, data are expected to show in the U.S. later today, according to separate surveys by Bloomberg News. Brazil will report GDP data for the second quarter.
Japan Prices Rise at Fastest Pace Since 2008 in Abenomics Boost
Customers browse in a book store in the Ginza district of Tokyo, Japan. Photographer: Tomohiro Ohsumi/Bloomberg
Consumer prices excluding fresh food climbed 0.7 percent from a year earlier, the statistics bureau said today in Tokyo. That exceeded the median estimate of 29 analysts surveyed by Bloomberg for a 0.6 percent gain. Industrial output rebounded a less-than-forecast 3.2 percent from the previous month when it fell the most since Japan’s record earthquake in March 2011.
The faster increase in prices helps efforts by Abe to shake households’ deflationary mindsets as the Bank of Japan rolls out unprecedented easing that helped spur a third straight quarter of growth. At the same time, challenges remain: the BOJ is still distant from a goal of generating 2 percent inflation and prices last month were partly pushed up by energy and imported-goods costs after a decline in the yen.
“Japan is moving into real inflation,” said Junko Nishioka, chief economist at Royal Bank of Scotland Group Plc in Tokyo and a former Bank of Japan official. “Today’s data is encouraging for the BOJ, and they are likely to keep monetary policy on hold.”
The Nikkei 225 Stock Average fell 0.1 percent as of 10:16 a.m. in Tokyo, erasing an earlier rise. The yen rose 0.1 percent to 98.23 per dollar. The yield on the benchmark 10-year Japanese government debt was unchanged at 10:15 a.m. in Tokyo.
Early Stages
Excluding energy and fresh food, prices fell 0.1 percent in July, slowing from a 0.2 percent decline in June, today’s report showed. It was the smallest drop since February 2009, and less than a median forecast for a 0.2 percent drop in a Bloomberg survey.
The jobless rate was 3.8 percent, a separate government report showed today.
A sales-tax increase planned for April threatens to damp the economy’s recovery even as it would help to shore up the nation’s finances. Bank of Japan Deputy Governor Kikuo Iwata this week called for patience, saying it would take more time for the central bank’s unprecedented monetary easing to trigger “persistent and steady pickups in prices and wages.”
The BOJ’s loosening is “in its early stages, and I hope you will be patient enough to see its effects permeate the economy,” he said.
Wheat Prices
The yen’s slide of about 20 percent against the dollar over the past year and the shutdown of almost all of the nation’s nuclear plants after a crisis in 2011 have contributed to the jump in the costs of imported goods and energy.
Wheat prices in Japan, which imports 60 percent of its food, will increase for the third time in a year on a weaker yen, with imports sold by the government to flour millers including Nisshin Seifun Group Inc. rising about 4.1 percent on average in October, the ministry of agriculture said on Aug. 28.
A maker of Japanese sake, Nihon Sakari Co., announced on Aug. 27 its first price increase in 19 years from October, citing rising prices raw material prices and higher logistical costs.
Oil rose to the highest level in two years this week on concern that a conflict in Syria may spread and threaten supply from the Middle East. Gasoline prices at home stayed at 160.2 yen ($1.64) per liter for a third straight week, the highest since October 2008, the trade ministry reported on Aug. 28.
“Price are rising, basically because of rising energy costs,” said Masamichi Adachi, a senior economist at JPMorgan Chase & Co. in Tokyo and a former BOJ official.
Sales Tax
Abe has summoned 60 economists, business leaders and representatives of consumers to discuss this week whether to lift the sales tax. He will make a decision by early October, taking into account views of those people and economic data, including revised gross domestic product data for the second quarter on Sept. 9. Preliminary data showed annualized growth of 2.6% from the previous quarter.
The economy is moving in a positive direction in terms of being able to implement the sales-tax increase, Economic Minister Akira Amari told reporters in Tokyo today.
A higher levy would add to costs for households, even as income-growth remains stagnant, threatening to hurt consumer sentiment.
Wages (JNLSUCTL) fell or were unchanged in 10 of the 12 months through June, according to the Ministry of Health, Labour and Welfare. Consumer confidence fell for a second straight month in July as the ratio of those who expect prices to increase in a year rose to the highest level in almost five years, according to a Cabinet Office survey released on Aug. 9.
Break-even Inflation
Even as Japan’s CPI rises, a market gauge of inflation expectations today suggested the BOJ will have a hard time achieving its target. Japan’s break-even rate, derived from the difference between government bond yields and those on inflation-linked debt, signaled inflation of 1.16 percent in the next five years, down from as high as 1.84 percent on May 15.
Elsewhere in Asia, South Korean industrial production unexpectedly fell 0.1 percent in July from the previous month, according to statement today from Statistics Korea. India’s GDP probably rose 4.6 percent in the three months through June from a year earlier, according to the median of 44 estimates in a survey.
Italian unemployment in July is forecast to rise to 12.2 percent, while the jobless rate in the European Union for the same period is expected to be unchanged, according to separate surveys by Bloomberg News.
Personal spending in the U.S. probably increased at a slower pace in July, while a University of Michigan confidence index probably rose in August, data are expected to show in the U.S. later today, according to separate surveys by Bloomberg News. Brazil will report GDP data for the second quarter.
Japan Prices Rise at Fastest Pace Since 2008 in Abenomics Boost
Tomohiro Ohsumi/Bloomberg
Customers browse in a book store in the Ginza district of Tokyo, Japan.
Martin Schulz, an economist at Fujitsu
Research Institute in Tokyo, talks about Japan’s economy, fiscal and
monetary policies.
Japan’s consumer prices increased at the fastest pace since 2008 in July, adding to signs that Prime Minister Shinzo Abe is making progress in pulling the economy out of deflation. Schulz speaks with Susan Li on Bloomberg Television’s “First Up.” (Source: Bloomberg)
Japan’s consumer prices increased at the fastest pace since 2008 in July, adding to signs that Prime Minister Shinzo Abe is making progress in pulling the economy out of deflation. Schulz speaks with Susan Li on Bloomberg Television’s “First Up.” (Source: Bloomberg)
The jobless rate was 3.8 percent, a separate government report showed
today. The increase in industrial output followed a decline the
previous month.
No comments:
Post a Comment